There are some common misunderstandings or misconceptions about home loans in today’s market. EMIs, or equated monthly instalments, have been one of the key subjects of conversation for homebuyers now that interest rates on home loans have decreased. With so many myths about HOME LOAN, it’s easy to fall victim to them if you don’t know the truth. As a result you can apply for loan against property online today.
Inflationary monthly instalments result from a high rate of interest
When borrowers are paid a higher rate of interest on their home loan, their first response is to increase their monthly payments, which would cause them financial difficulties. The majority of banks aim to make EMI payments as easy as possible for their customers. If the interest rate on your home loan is high, the bank will extend the term for you so that you don’t have to pay a big monthly payment. While you will end up paying a large interest sum in the long run, your month-to-month financial planning is unaffected if the rate is high.
Prepayment is often accompanied by a penalty fee
This isn’t always the case, however. Prepayment fees are typically imposed for the first three to five years of a home loan. Also, the charge is reduced throughout the loan. Prepayment fees may or may not be paid by certain banks or lenders. It is entirely dependent on the financial institution’s existence.
You will not be impacted by such fees if you intend to repay your home loan debt with your savings. Unless you choose to refinance your home loan with a different financial institution, most banks and lenders waive the prepayment penalty.
Loans with the lowest interest rates are good
It is a widely held belief in the marketplace that home loans with lower interest rates are the safest. However, what you think you see isn’t always accurate. If a home loan has a low-interest rate but still has fees such as a legal appraisal fee, a prepayment penalty, and so on, you might end up paying a lot more for an ostensibly cheaper loan. Make sure there are no hidden fees or penalties on your home loan by reading the fine print. You should always compare home loans before choosing one, rather than going for the one that appears to be the cheapest.
Fixed-rate mortgages are preferable to variable-rate mortgages
When it comes to interest rates, you should not be swayed by a single term. If you want a fixed-rate home loan, it does not guarantee that you will be able to keep that rate for the duration of the loan. Fixed-rate home loans have a rate that stays the same for a set period. The money market clause and interest rate resetting apply for the remainder of the contract.
Banks are unconcerned about the applicant’s employment situation
This is yet another popular misconception that exists these days. The job status of the home loan borrower is a big concern for banks. The applicant must keep the bank or lender informed of his or her retirement, job status, unemployment period, and other relevant information. Home loan agreements contain a provision that specifies that if the borrower is unable to repay the loan, his or her current employer will be responsible for paying the balance.
A home loan fills the difference between the fantasy of owning a home and the truth of doing so. However, before you buy a product, you must first educate yourself about it.