With an increase in personal incomes, people who work outside their hometowns and live in metropolitan cities are on the look-out for home loans to purchase homes. They break away from the monthly rent payment cycle..
That opens the gates for individuals to think about buying a home and financing it through a home loan.
However, there are a host of misconceptions about getting a home loan. These myths exist because they are based on incomplete knowledge.
Below are a compilation of common misconceptions about getting a home loan:
1. Most financial institutions do not provide loans to cash income groups
There is a misconception that people earning in cash cannot get a loan. Traditionally, cash earning households have been given a miss by formal credit institutions. They might be earning well, however due to the informal nature of their work, institutions avoid providing loans to this segment.
At Shubham, we are more than happy to break this myth!
To help this section of the society that belongs to the informal income group, Shubham brings to you easy, efficient and customized home loan solutions. With us, you can apply for home loans even without zero credit history and cash incomes. Check out the process here: https://shubham.co/contact-us.php
2. A long list of documents required for home loan approval
Another misconception that most Indians have about getting a loan is that there is a long list of documents required.
But this is not the case with us.
While applying for a loan with Shubham, you need to provide documents such as your identity and address proof, bank statements and property documents. The entire documentation process is simple. People who want to avail a home loan but are restricted currently because of lack of complete documents like income proof(s) can also apply.
3. A high credit score is a guarantee on approval of loans
In general, a high credit score is one of the most crucial factors when it comes to getting a loan. It is considered as the key to acceptance for all loan applications.. But that’s a myth. A high credit score won’t guarantee home loan approval. There are other factors such as the monthly income of the borrower, monthly expenditure ratio, current obligations et al that determine the approval of home loans.
With us, you do not have to worry about a high credit score. Even if you have a low credit rating, you can still apply for a loan as we generally look at the borrower’s financial income and capacity to repay the debt.
4. A low-interest loan is the best deal
A lower interest rate does not guarantee the best deal for the borrower. Interest rate is one of the essential factors; however, it is not the only factor affecting the overall cost. A home loan borrower must study other vital factors such as loan initial processing fee, home loan processing time, transaction fees, legal fees, etc.
At Shubham, we do not charge our customers any additional charges and that is how we offer our clients the best deal.
5. Transferring home loan to another financial institution includes repaying from scratch
Many home loan borrowers have this misconception that they would have to repay the loan from scratch if they want to switch from one financial institution to another. Under the “home loan amortization plan” you will find a summary of your principal and interest charged out of each EMI.
The new financial institution will check your remaining principal amount that is still to be paid, and they will also calculate the EMI based on the number of months left with your previous bank /financial institution.
6. Increase in interest rates directly means increased EMIs
The first thing that comes to mind when you hear increased interest rates is that you would have to pay
inflated EMIs. But that’s not the case.
Usually, home loans are based on floating interest rates as these loans are of longer duration like 15-20
years. The financial institutions base the interest rate they charge for lending money on the repo rate fixed by the RBI.
We hope this article helped in busting some of the misconceptions you had about the entire process of getting a loan. Talk to our representative today to take the first step towards owning your home.