Financial Blog

The home loan myths you should know about

posted on 2019-09-28 12:44:49 by Admin

Home loans are getting popular as a suitable method to arrange required funds to buy a property. On the other hand, there are several mistaken beliefs linked to a home loan. Therefore, to understand home loans in a better way, it is necessary to drive out these misconceptions and just keep all the focus on the actual facts.

Well, have a look at some of the common home loan myths given below:   

Low rate of interest is just another norm

The applicants get their attention grabbed easy and quick by the home loan companies offering a low-interest rate. Their decision is totally dependent on the rate of interest offered without knowing about the other limitations. Loan providers demanding for lesser interest rate might be charging a processing fee that is much higher in comparison to other available options, prepayment fine, and several other hidden charges. Therefore, it is important to know about all the terms and conditions linked.       
         
Home loan interest rates are given by RBI  

The Reserve Bank of India is accountable for giving the rates of interest. However, it is not directly in charge of deciding home loan interest rates for individual home loan companies. The loan providers set interest rates on home loans they provide to customers on the basis of the loan amount. Therefore, the current home loan interest rates may vary for different banks.
 
Home loans at a fixed rate are better

While a home loan with a fixed rate of interest provides assurance in terms of monthly interest rate to be paid, it does not serve with the ease of paying low interest if the percentage gets reduced by the bank.

Home loan validates the property title  

Well, this one is the major misconceptions regarding home loans. Though the bank manages to get the documentation and related property aspects carefully, the buyer of that property must get certain about the genuineness of the title deeds of the property.

Pre-payment policy is the finest
 
For the fear of surplus amount at their disposal, loan applicants get tempted to right away prepay the loan amount. But is prepayment actually a good option to go with? Well, Prepayment is sensible only when it is done at an earlier stage of taking the loan. Additionally, the home loan settlement and interest rate are suitable for tax deduction. This can be utilized by the borrower to decrease his tax payments. Moreover, as the home loan interest rates are usually less, the applicant can make use of extra money to invest in resources that produce a higher return. Therefore, the idea of prepayment is not perfect all every time.

Applying for a home loan is a plan that requires long-term dedication, and this should be carried out only after the proper validation by the borrower. So, if you are also planning to take a home loan to buy a property, then It is necessary to be clear about all the related features and policies of the same before choosing one for yourself.