The globally influential Real Estate sector is divided into four sub-sectors – Commercial, Housing, Retail, and Hospitality. This sector is expected to contribute around 13% to India’s GDP by 2025.
Likewise, housing, a sub-sector of real estate, is already the 4th largest contributor to the country’s GDP. The increasing demand for a home loan makes this sector influential, and it is anticipated that such advances would experience a sky-rocketing growth of 40% by 2025.
An individual aiming to avail such advances can go through the internet to compare their options or consult with a loan aggregator for advice. But you avail a housing loan, it is imperative to avoid a few myths, such as –
- Interest rates aren’t negotiable –
One of the primary myths that surround this sector is that interest rates are not negotiable. Considering appropriate justification, if a borrower is not satisfied with the quotation provided by their lender, they can easily negotiate the interest rate. Borrowers with a high CIBIL Score and a healthy repayment capacity can easily negotiate their terms with lenders.
Nonetheless, if a lender refuses to budge from their quotation, one can easily change their option to avail of a better offer. An individual should compare all available options online to avail of a better deal.
- Short tenor helps to close a loan faster –
Amongst the common myths, short tenor helps to close a loan faster is quite popular. An individual should consider their repayment capacity before availing a home loan and should not fall for such myths. Although short tenors can help an individual to close their obligation faster, it can also overburden them. A short tenor leads to a high EMI amount, which may become hinder an individual’s monthly budget, causing loan default.
- A high CIBIL Score alone ensures loan approval –
Another misconception that an individual may have is that a high CIBIL Score ensures loan approval. Amongst a few home loan eligibility criteria, an individual should hold a minimum CIBIL Score of 750 to apply for such advances. Furthermore, the impact of credit score for a home loan is a critical factor to apply for credit, but it does not ensure loan approval. Nevertheless, a CIBIL score is not the only eligibility factor you need to consider. Other aspects include FOIR, age, income, employer’s profile, etc. are also factors that can influence an individual’s housing loan.
- Low-interest rates are the only prerequisite for a loan –
Interest rate is one of the crucial factors an individual should consider before availing a home loan. Still, an individual should avoid falling for myths like availing the lowest possible interest rate while deciding their loan option. Instead, you must pay attention to other factors like repayment tenor, mode of repayment, terms, and conditions, etc. before availing a housing loan for the best experience.
- Interest rate hike influences EMI –
A borrower gets influenced by the fluctuations of the market, especially when the Reserve Bank of India hikes the rate of interest. An individual’s initial reaction can be that an increased interest rate can quickly escalate their EMI.
An individual should be aware that the hiked home loan interest rate is applicable at the end of one’s loan reset period.
- Financial institutions levy high charges over foreclosure and prepayment –
One of the myths that you may frequently hear is that financial institutions charge a high amount of penalty over foreclosure and prepayment. The actual payment necessary may greatly vary between one lender and another.
An individual aiming to avail of a home loan should avoid believing in the above-stated myths. An individual should directly calculate their home loan eligibility beforehand and apply for the credit.