Home loans are an essential factor for the purchase of a house for an individual. Home loans have many misconceptions in the minds of the people. Home loans are easily available for borrowers. Only the borrower has to submit all the necessary documents & have a proper CIBIL score for the approval of the loans. A CIBIL score of a minimum of 750 is necessary for the borrower to get the home loans. When the CIBIL score is good, it becomes easy for the borrower to avail of loans from any lender. There are multiple public sector banks, private banks, co-operative banks & NBFC’s which provide loans to the borrowers. The banks or an NBFC are keen to extend the loans to the borrowers; only the lenders need the borrowers who have a proper source of income and proper credit score. Availability of home loans helps the individual buy the dream home at an early stage of life rather than waiting for the money to accumulate. And also, tax benefits are applicable to the borrowers up to a certain extent. The longer the tenure of the loans is the tax benefit that the borrower can take.
It is the responsibility of the borrower to read the documents of the loan agreement carefully before availing of loans. The borrower should ensure that every point in the loan agreement is read carefully, and also if there is any doubt in the loan agreement, the borrower should ask the bank official regarding the doubts in the clause agreement. Chances could be there that the lender may add some misleading clauses in the agreement or else may charge hidden charges to the borrower. Thus if the clause agreement is found with some misleading clause, then, in that case, the borrower should try with another lender for the loans. But the borrower should ensure complete satisfaction while availing of loans and should not keep any queries pending while approving the loans. The borrower has to keep the property document mortgaged with the bank in case of availing of loans. After the repayment of the loans, the borrower should take the completion certificate of the loan repayment and ensure that the loan status is updated in the CIBIL after the repayment so that there is no pending status in case of the outstanding loans. The CIBIL score of the borrower becomes better after the completion of the loans, thus enabling the borrower to avail future credits easily.
Few importance myths busted :
- Home loans cannot be opted for by self-employed persons:
This is something wrong conceptions people have in their mind. Home loans are surely extended to self-employed applicants. Only the self-employed people should have proper records of the business’s turnover and a statement of the income tax returns. And both the qualified professionals and the business run by unqualified professions loans are being given to the borrowers. There are no restrictions on the extension of the loans to self-employed borrowers.
- Bank charges exorbitant interest amount to the borrowers:
The interest rates are calculated on a compounded annual basis; the interest rates have continuously been reducing on the home loans. The interest rates can be availed as low as 6.50% per annum by the borrower. Thus it is an attractive proposition for the borrower to avail of home loans at competitive interest rates.
- Once the CIBIL score goes down bank does not provide loans:
Even if the CIBIL score is low, some of the lenders need to be identified who provide loans to the borrowers at higher interest rates. Also, the CIBIL score can be improved by paying the existing loans or credit card bills on time, leading to an increase in the credit score. This can help the borrower avail of loans easily.
- Bank charges hidden charges to the borrower:
Most of the prominent leaders among the popular ones do not charge any hidden charges to the borrowers. The bank clarifies the charges before processing the loans that they would charge the processing fees and sometimes additional document verification fees before processing the loans. Rest whatever the interest amount is applicable that only is taken by the bank. Also, if any of the officials mislead the customers with false information, the customer can complain to the bank’s higher authorities. As misleading the customers is against the companies compliance policies, the bank or an NBFC may take some action against the officials who misguide the customers.
- Bank only approves loans to high-income groups:
Banks require a minimum salary of Rs.25,000 for the processing of the loans. The actual loan amount is approved only as per the income of the borrower; it is not necessary that the bank approves the loans only for people with high income. Suppose the income is far lower than even Rs. Twenty-five thousand then only in that case the bank may not be able to lend the loans to the borrower.
There are many misconceptions in people’s minds related to loans. In the above points, many of the myths have been cleared, which are there in the people’s minds. The banks are far more liberal in approving the loans of the borrower. And in case if one of the lenders rejects the loan application, the application can be forwarded to another lender to get it approved.