11 most important questions to ask yourself? before taking home loan!

Here is a list of some important questions to help you avoid making mistakes while planning to avail a home loan.
Buying a home on loan requires a lot of financial decisions to be made. Even a small mistake while buying a home can ruin a buyer’s other financial goals. Home loans are expensive long term loans. Changes in loan fees or interest rates can translate into substantial installments.
That being said, depending on whether you are planning to buy an under-construction property or are ready to move in, due care should be taken in selecting the appropriate loan product and finalizing the loan amount which should be considered timely. can be repaid in full.
This becomes even more important in today’s times when banks have reduced their home loan interest rates to several-decade lows to encourage interested buyers to take the plunge.
We have compiled a list of some important questions to help you avoid making mistakes while planning for a home loan.

Q1. Are you planning to purchase a home for end-use or as an investment?

It’s important to understand the purpose of buying a home. as an end use or investment. If you are buying for end use, you should focus on questions such as what would be the ideal property size that can meet the needs of your family, what are the amenities on offer, around your property What is the social and physical infrastructure of, etc. .. On the other hand, if you are looking to buy a house only for investment purposes, you should also look at the potential for return on the property, i.e. capital appreciation and the ability to generate rental income. Based on your decision to buy a home for end use or investment, you should also assess its impact on your tax liability.

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Question 2. Have you weighed the expectations of your property by its affordability?
Most of us want to have a big house full of amenities in a beautiful environment. However, you should assess and narrow your expectations based on your financial ability to comfortably repay the loan required to buy the property. Now, many people increase their household budget by a long margin thinking that their income will increase in the future; However, they forget that the expenses also increase with time. So, you might not want to buy a home that you consider to be too expensive. Stick to your preferences and buy a home with non-negotiable features based on your needs to avoid over-borrowing.
Q3. Do you have the required money margin?
Before applying for a home loan, make sure you have enough margin fund to contribute on your behalf. Banks generally allow home loans up to 90% of the value of the property in low value cases and up to 75% in high value cases. The balance amount should be provided by the borrower as advance/margin. Apart from this, there are other expenses like registration, interior decoration etc. That they are not likely to be covered by the home loan. Margin requirements may vary depending on the borrower’s age, credit score, loan size, loan-to-value ratio, and other factors. Therefore, you should determine what margin amount you will need to pay while buying a home on loan, and also ensure that you do not breach other important financial commitments while building this fund.
Question 4. How good is your credit score?
Most banks have now linked the interest rates on their home loans to the credit rating of the borrower. If the credit score is low, the bank typically charges a higher risk premium and the effective interest on the mortgage loan increases accordingly. So, if you don’t want to pay more interest on the home loan, make sure you have a very good credit score (ideally 750-800) not only while applying for the home loan, but also throughout the life of the loan. above) retain.
Question 5. Can you afford the EMI?
Home loan requires a long term commitment. Before applying for a home loan, you should consider your existing loans and also the loans that you are planning to take in future to assess your loan viability. Existing loans can limit your ability to pay. You may also have planned to take out loans in the future, for example, student loans for your child’s higher education. Adding a new loan in future may reduce your ability to pay and may make it difficult for you to pay off your home loan. So, make sure to assess your home loan EMI affordability keeping in mind your expenses and other credit obligations.
Question 6. Have you ended up with a lender that offers the best payment terms?
There are many banks and financial institutions in the market that offer home loans in various forms. Choose your lender carefully based on factors like interest rate, processing fee applicable on the loan, processing time, relationship with the builder, etc.
Question 7. Do you have a regular source of income?
Be financially prepared before applying for a home loan. To repay your home loan EMIs on time, you should ensure a long-term arrangement for a regular source of income. You can focus on arranging multiple sources of income to ensure income stability. For example, you can start a part-time job or business to increase your income.
Question 8. Will a co-borrower be required?
Before applying for a home loan, make sure you meet the lender’s eligibility criteria. If you don’t meet the eligibility criteria like credit score, income level etc., you should be ready with a co-borrower arrangement like your spouse to join your loan. A co-borrower can improve your chances of getting a home loan and reduce your interest rate. Often the lowest home loan rates are reserved for women borrowers.
Question 9. Have you verified your ownership documents?
Before buying a property, you should have a legal expert who will verify the property documents to avoid future disputes. Lenders take legal opinion on your behalf and appraise the property before sanctioning the loan. If there is a discrepancy, the mortgage loan can be denied. Hence, you need to get prior authorization from your legal expert before applying for a home loan to avoid rejection.
Question 10. Do you have enough life insurance coverage?
Having adequate life insurance coverage can safeguard the financial future of dependents in case something adverse happens to the insured. Paying off a home loan for grieving family members can be a daunting task. Hence, having adequate life insurance coverage is highly desirable when you have a home loan. You can also buy term insurance or home loan protection plan.
Question 11. Will the new loan affect other important financial goals?
Buying your home is an important dream of everyone’s life, but not at the cost of other important financial goals. Are you going to run a household that will negatively impact your important goals, such as retirement funds, funds for your children’s higher education or marriage, etc.? Will taking a home loan limit your financial freedom? If the answer is yes, then you need to re-think and re-plan your home buying decision. You can also consider buying an affordable home to reduce your debt burden. The bottom line is that you should buy a home with loan when you are absolutely sure that it will not affect your other important financial goals in any way.