Purchasing a home is a significant investment option that requires careful consideration and thorough research of all the available options. To make your dream of buying a home come true, you might need financial assistance, and a home loan is one of the most viable options.
A home loan or housing finance solution is the amount borrowed from financial institutions to buy or construct a home. It offers a higher financing option for the longer term and a competitive interest rate.
Amidst numerous benefits offered by the home loan, several misconceptions can influence the homebuying process. In this blog, we will debunk all these myths regarding home loans to help you make an informed decision. Keep scrolling through to know the details.
Myth 1: You Need to Have a High Credit Score
Fact: The loan option is available only if you have a high credit score, which is undoubtedly one of the biggest misconceptions that needs to be debunked. While maintaining a high credit score of 750 or above helps you qualify for better interest and loan amounts easily, it is not the sole factor determining loan conditions.
Numerous lenders offer home loan to borrowers with less-than-perfect credit, but the terms and interest rates may vary. Therefore, if you do not have a high credit score, then worry not. With thorough research, you can find numerous lenders that offer loans matching your credit profile. Furthermore, by consulting a financial advisor, you can even get an idea of the best loan options available for you.
Myth 2: A Down Payment of 20% is a Prerequisite
Fact: Dispelling the widespread misconception that a substantial 20% down payment is an absolute prerequisite for home buying. While a larger upfront payment does confer advantages such as securing more favourable loan terms, a spectrum of loan programmes that accommodate lower down payments exists. These programmes help you to avail yourself of a home loan quickly and instantly without setting aside a huge down payment. The key lies in meticulous research and open discussions with lenders to identify the down payment strategy that matches your budget and financial circumstances.
Myth 3: The Best Interest Rate is Always the Lowest Rate
Fact: While applying for a low-interest rate home loan is undoubtedly beneficial, it becomes imperative to adopt a holistic perspective when evaluating home loan options. Certain lenders may entice you with remarkably low interest rates but charge numerous high fees and closing costs you do not know about. These hidden charges adversely impact your future expenses as it increases the repayment amount.
However, opting for a marginally higher interest rate with no fees or hidden charges significantly reduces the upfront expenses. You must do a comprehensive assessment of the total cost of the loan throughout its lifespan, meticulously considering not only the interest rate but also any associated fees.
Myth 4: The Loan Offerings are the Same at Every Financial Institution
Fact: While numerous banks provide home financing solutions, the differences in their services, interest rates, and accompanying closing fees are substantial. Each financial institution tailors its loan products to meet different market demands and customer preferences.
Thus, to secure the best possible deal, you should carefully compare offerings from various financial institutions.
Myth 5: Pre-Qualification and Pre-Approvals are the Same
Fact: It’s a prevalent misconception that pre-qualification and pre-approval are interchangeable terms in the home loan world. However, the distinction between the two is crucial for you to understand. Pre-qualification refers to the preliminary assessment that provides an estimate of the loan amount you can afford. This assessment is based on basic financial information such as income, debt, and assets.
On the other hand, pre-approval involves a more rigorous and comprehensive analysis of your financial situation. Lenders scrutinise your credit history, verify your income and employment details, and assess other pertinent financial factors. The significance of this thorough examination cannot be overstated, as sellers often view pre-approval as a strong indicator of your commitment and financial preparedness.
Thus, having pre-approval can set you apart as a serious and qualified buyer, potentially enhancing your negotiating position and expediting the homebuying process.
Tata Capital’s Hassle-Free Home Loans
If you are a first-time buyer and want to avail yourself of the best home loan from a reliable lender, you must rely on Tata Capital. They offer easy and hassle-free home loans of up to ₹5 crores at an affordable interest rate. Their loans are tailor-made to help you meet your specific needs with ease. With a reputation for transparency, flexibility, minimal documentation and customer-centricity, Tata Capital’s home loan stands to be the best housing option. Their home loan ensures financial support and a sense of security and trust.
So, if you plan to buy your dream home or renovate your home into an aesthetically pleasing and comfortable place to live in, you can check Tata Capital’s home loan option.
Head on to their website to know more details!