For many individuals, buying the house of their dreams boils down to getting a decent house loan in the market. With house loan interest rates at a low record in the year 2021, this is the best time to apply for a home loan. But don’t be in a hurry while considering going for a house loan as it is an emotional decision, you should know the long-term implications and do a thorough search to eliminate common mistakes that may not only dent your probability but also put you into a spot of financial stability.

Let us take a look at a few common mistakes that you must eliminate at any cost while opting for a house loan including:

Opting For Shorter Tenures

It is recommended not to go for a short-term house loan. The shorter the tenure, the small will be your home loan amount. It might also increase the risk of default on the EMI’s payment, deciding the high EMI. The eligible home loan amount will also vary in aspects such as credit score, repayment capacity, and age. Also, you require a high credit score and good repayment history to get a higher amount and get better terms and conditions. A long tenure may ease your EMI and can help you to achieve your financial aims.

No Adequate Corpus for Home Loan Down Payment

As you may already be aware, you may only get up to 80-90 percent of the home value of the property from the bank. The remaining amount must be deposited in the down payment form or a margin contribution before you may get a home loan. So, it is crucial to first make sure that you have the proper corpus with you for the same. You should note that you don’t have to compromise the emergency savings to make up the corpus amount. It might be a big thing. Also, you can try to make as high a down payment as possible to decrease your total amount of home loan.

Lack of Proper Search

Home loans are commonplace and quickly available. With the demand increasing day-to-day, many financial institutions offer customized schemes to cater to the requirements. So, it is crucial to do a proper search before applying for a home loan from a specific institution. House buyers have to double-check their needs, check rules and regulations, and flexible repayment features, plan their finances and understand hidden fees and processing charges to name a few, and choose the proper bank and scheme. In today’s era, several sites help you to compare the house loan products provided by various banks. Lack of search might allow you to pay higher EMI or unwanted hidden fees.

Overestimating the Capacity of Repayment

The huge mistake that individuals make is to not involve the monthly cost while calculating the capacity of repayment. The bank searches for your liabilities while providing a home loan. If your monthly expenses are huge and you plan for a home loan with a higher installment amount, it might lead you to a huge financial issue. Your outflow of EMI must not exceed 50 percent of your income. You must not consider your future events like salary hikes or bonuses and understand your current financial status before going for a huge loan.