Home Loans

6 Misconceptions about Home Loans – Explained

Home loans have become the go to option for first-time house buyers and they are a long-term commitment. So, one needs to do as much groundwork as possible before choosing one. However, there are a few myths that surround the finance industry when it comes to availing home loans. Many of these myths make things a hassle for both the lender and the borrower.

Good CIBIL means approved loans

A good CIBIL score is one of the necessary factors that will be taken into consideration by any lender. People often have a misconception that if they have a decent CIBIL score, they will get their loan. However, it isn’t the case since loan approval is based on several other factors too. Various factors like age, job stability and number of dependants can also have an influence on your loan aspirations. For example, it wouldn’t make sense to the lender if they disburse a loan to a person who has a good CIBIL score with no income.

Shorter tenures are the best

One common misconception that revolves around the world of finance is that shorter tenures are the best. But it isn’t the same case for everyone. When you have a shorter tenure, you will be forced to pay a bigger EMI amount which won’t be ideal for everyone. Knowing precisely your home loan eligibility can be a great asset when you’re looking for Home Loans. Before choosing the tenure make sure of your wallet strength and select accordingly.

Fixed interest rates are the best

People are sceptical about the floating interest rates when it comes to home loans since the interest rates keep on changing. Sometimes, the market fluctuations can go down which can be profitable for the borrower.

Interest rates are non-negotiable

Most people believe they have to accept whatever the terms and conditions given by the lender which isn’t true. You can always negotiate conditions that are favourable to you. If the conditions are within the powers of the lender, you will get a good deal for sure. You can only know whether you’re getting an attractive interest rate or not just by discussing terms with the lender.

Interest rates fixed by RBI

Another common misconception is that the Reserve Bank of India (RBI) fixes the interest rates which is untrue. Lenders fix their own interest rates based on various factors. This gives the borrower a variety of options while they are scouting for Home Loans.

Prepayment attracts penalties

During the earlier days, foreclosures or prepayment penalties are levied on people who choose to pay a sum of their loan earlier. However, this is not the case now. RBI directed banks to not levy taxes on prepayment of loans with floating interest rates. So, if you have got the extra money, it makes sense to pay off a big sum of your dues. It will also reduce your burden on EMIs.

To Summarize

Now that you know the common misconceptions, you can go ahead and pick the right loan for you. As we already know, taking up a home loan is a long-term commitment. It is wiser to take the necessary time to join hands with the right lender. One such place where you can avail the best of housing loans is Cholamandalam Investment and Finance Company Limited. Just give a missed call to 07874782782 and you’re all set to achieve your dreams. You can also apply for Chola home loan by logging on to https://www.cholamandalam.com/apply-now-home-loans

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