Don't get tripped up! 8 common home loan myths debunked for savvy borrowers
Many individuals have a cherished dream of owning a home. To transform this dream into a reality, many individuals choose to pursue a home loan, as it allows borrowers to gradually repay the loan amount through affordable Equated Monthly Instalments (EMIs).
However, with a plethora of misinformation out there, it is important to approach this decision with caution. False information can easily cloud one's judgement. In this article, we will dispel common myths and provide you with facts about home loans.
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Fact: Although a shorter term entails lower overall interest payments, it results in higher monthly EMIs. It is essential to select a term that permits manageable payments without compromising other financial objectives. Many lenders provide prepayment alternatives, enabling you to reduce the loan term later if your financial situation improves.
Fact: Although a good credit score (usually above 750 in India) greatly enhances the likelihood of securing a home loan approval, it is not the only criterion lenders evaluate. Even with a strong credit score, home loan approval is not guaranteed. Lenders scrutinise factors such as your debt-to-income ratio, employment history, and existing debts. A high credit score coupled with unstable income or substantial existing debts could still trigger concerns for lenders.
Moreover, despite having a favourable credit score, a small initial payment may require additional scrutiny or potentially lead to rejection. When the loan amount substantially exceeds the valuation, relying solely on a good credit score may not suffice to close the disparity.
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