Availing of a loan is one of the biggest decisions in your life, and hence, you must conduct in-depth research on the right kind of home loan to make an informed decision. There are various things you must consider when availing of a home loan, and it may not be easy for you to decide from where you must begin. No matter whether you are searching for a Home loan in Kerala or a Home Loans in Ahmedabad, you must ensure to take an informed decision to zero on the best home loan as per your preference and suitability.
From understanding the rate of interest to knowing what type of loan is prudent for you, the list below will allow you to get started on the correct foot. With the below info in hand, you can make the best possible choice considering your financial situation.
Check out your potential to repay before you take up the home loan proceeds from any lender.
The initial rule of borrowing smartly is to avoid spending beyond your means, which you must be hearing from your elders for a long time. Avail of a loan that you can easily afford and repay by the due date. You can obtain loans very easily. Repaying the same, on the contrary, may be tough. It doesn’t make complete sense to borrow if you do not require the funds. It is simple to avail of a loan, but you must avoid doing so if your debt-to-income ratio is very high.
If your EMIs are very high, your other important financial goals, like saving for your child’s high education, retirement, tour abroad, etc., may be hampered. In such scenarios, retirement planning is often the first go decision you must make. Ensure you do not make this kind of mistake.
You can avail of a loan of as high as 30 years, so do not wait
Note that you are availing of a loan that will not just form an asset that will enhance your value but also will offer a secure and safe future to all your family members during and after your lifetime. As your income increases, you can opt for the home loan prepayment option to reduce your overall interest burden on your home loan.
Do not allow the fear of high EMIs to prevent you from purchasing a home. With many lenders may it be banks or NBFCs, or digital lenders, you can fund your home for a tenure of up to 30 years with payments that are highly affordable. In fact, your EMI payment, in a few cases, may be lower than what you pay as rent.
Keep up with your repayments for EMI by repaying them by the due date.
It is in your best interest to stay prudent, particularly when it is about paying off your debts. Ensure you do not miss out on your debt repayments. Any outstanding debt, even if written off by a financial institution or bank, may reflect in your future records and may prevent you from availing of a loan as per your requirement. Even missing out on a single EMI or delaying your EMI repayment can have a considerable impact on your credit profile and your credit score and may restrict your opportunities to obtain a loan later in life. Making a missed loan payment may result in costly late fees payment and interest charges with a massive dip in your score. Try and make your credit repayments on time whenever it is possible.
Borrow just as much as you require
It is a golden rule when it comes to financial planning and attaining success in life, do not invest using borrowed funds. Safe investments, such as fixed deposits or bonds, will not be able to provide you with the same interest rate that you pay on your home loan. Investments that provide higher returns, such as stocks, may be risky. If markets witness a bearish scenario, you will not just lose out on your money but be repaying off your EMI, which will put you under great pressure.
A decision of availing a loan must be made with thorough contemplation and using your judgement. It is recommended that you carefully consider the amount of money that you want to borrow and only avail it if you have a substantial purpose. This is because, for such secured loans, lenders hold you accountable for the money that you avail and use for each purpose. So, do it wisely.
Just because you have availed of a loan, avoid overspending. Take it according to your minimum requirement and take the top-up in future if you require more funds. For example, if you presently need a floor house, do not plan and go for 2 or more levels, as you might end up repaying the EMI for the portion you did not even use. In the case in the future, you require an additional floor, then you may opt for the top-up home loan option for this purpose.
Do not opt for any credit option to spend as per your wants. However, if you require going somewhere, plan the same out and save for it. On the contrary, borrowing funds to form a property may make complete sense if you are looking to reside in it and save on your rent.
Secure your family member with insurance coverage for the home loan and other loans you have
You plan for all your crucial financial moments like your child’s education, your family home construction, your medical and even your pension. Yet, you always avoid one crucial responsibility to secure your family against the outstanding loan debts you have if something happens to you.
As your family income may be dependent on you, your family may witness financial problems and difficulties if you become incapacitated and unable to work or if something unfortunate happens to you. If you avail of a huge loan to purchase a home or a car, ensure to get insurance cover for the loan amount that you have borrowed. If something misfortunate happens, then insurance payment will assist your family to efficiently repay the loan and retain your home or any other asset you bought for them using a loan.