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Applying for a home loan? Grave Mistakes to Avoid While Applying for a Home Loan

Purchasing a home is a very emotional decision. But do we plan ahead of time when taking out a home loan? Are we certain that the house loan that we are taking is the best in the industry? For most people wanting to buy their own home, home loans have become a useful resource. However, if the borrower makes blunders such as not using the HDFC home loan EMI calculator when applying for the loan, the process can quickly turn into a nightmare. In comparison to other loan products, a home loan often has a very lengthy term and a large sum involved. As a result, there is no space for error. The following are seven critical mistakes that home buyers should (absolutely) avoid:

Not doing self-assessment of creditworthiness: The first and most important step before applying for any loan after the SBI home loan EMI calculator is to have a good credit score. A credit bureau offers credit reports that are simple and convenient to download. A credit score of 700 or higher may qualify you for a reasonable interest rate. This will also enable you to apply for a loan from the best banks. As you must know, lenders will assess your creditworthiness and a poor credit score and repayment history will lower the score and make the borrower ineligible for good home loan schemes.

Inadequate research: Home loans have become very common and widely available. As the demand for customized schemes grows, numerous financial institutions have started to offer them. As a result, it is critical to conduct thorough research before applying for a loan from a specific institution. Home buyers need to double-check their necessities, organize their budget, verify terms and conditions, identify hidden costs, processing fees and flexible repayment alternatives to name a few and consequently, select the suitable bank and scheme. Nowadays, many websites allow you to compare the home loan products offered by different banks. Lack of research and not using the SBI home loan EMI calculator to its full capacity may lead you to pay unnecessary charges or higher EMI.

Opting for shorter tenures: As far as possible, it is advisable not to opt for a shorter tenure home loan. The shorter the tenure, the smaller the loan amount. This also leads to a higher risk of default in the payment of EMIs, considering the high EMI. The eligible amount that you can calculate via the HDFC home loan EMI calculator would depend on various factors such as age, credit history, and repayment capacity. Also, you need a high credit score and a good repayment history to avail of higher amounts and get favourable terms and conditions. A longer tenure will ease your EMI and help you meet your financial objectives.

Not having sufficient funds to make the down payment: Usually, banks provide home loans of up to 80 percent of the value of the property, depending on the CIBIL score and repayment capacity of the borrower. This means that the borrower should contribute the remaining 20 percent of the cost, as a down payment. For example, if the value of the property is Rs 1 crore, then, the bank will provide a maximum loan of Rs 80 lakhs and the remaining Rs 20 lakhs should be put down by the borrower, as a down payment. The borrower first needs to provide the down payment, after which, the bank starts disbursing the loan. So, it is essential that the borrower is ready with this margin money, before applying for the loan and using the SBI   home loan EMI calculator.

Applying for a bigger loan amount than you can repay: When financing your home, or any other purchase, consider your current financial situation. Ideally, your EMI outflow should not be more than 30-40 percent of your income. Do not try for a large amount of loan with a higher EMI, on the premise that you are due for an increment in six months. You will be in a mixed state if the increment is lower than expected, or if there are additional expenses. Savings is also an area, where you should not cut corners. So, consider your overall current financial health when you borrow and use the HDFC home loan EMI calculator before submitting the loan application.

Overestimating repayment capacity: The biggest mistake which people generally make is to not include their monthly expenses while calculating their repayment capacity. The bank generally assesses your liabilities while granting a loan. If your monthly expenses are high and you take a home loan with a higher EMI amount, it may lead to a huge financial crisis. Your EMI outflow calculated using the SBI   home loan EMI calculator generally should not exceed 30-40 percent of your income. You should not depend upon future events such as an increment in your income and instead consider your present financial situation before opting for a higher loan amount. Looking at the current situation, it is always advisable to understand your expenses before applying for a loan or selecting an expensive property.

Not taking any insurance cover: Home loan borrowers should take proper insurance cover to protect their families from financial distress. In case of any unforeseen contingency, home loan insurance can help the family clear the dues and prevent your family members from facing financial wrath. Multiple insurance products cover home loans. Take life insurance for a sum that includes your liabilities. Not securing your liabilities is a risk that most borrowers do not recognize.

Selecting the wrong loan product: There are several types of home loan products in the market and the borrower must choose the most appropriate loan product, to get the maximum benefit in the long term. For example, banks offer floating-rate home loans, fixed-rate loans, semi-fixed-rate loans, home loans with overdraft benefits, incremental EMI home loans and so on. The home buyer needs to figure out his/her own requirements using the HDFC home loan EMI calculator and accordingly, select the appropriate loan product, as otherwise, one may end up paying unnecessary charges or find it difficult to repay the loan.

Taking a loan for a short tenure: Banks generally provide home loans for tenure of up to 30 years, depending on the eligibility which they can calculate using SBI   home loan EMI calculator. There is no prepayment penalty on the home loan. So, if you take a home loan for 30 years and repay it in 10 years, then, you do not need to pay any penalty. However, if you have taken a home loan with a tenure of 10 years and failed to repay an EMI, then, you may be liable to pay certain penalties and it will also negatively impact your CIBIL score. Hence, it is better to opt for a longer-duration home loan.


Obtaining a home loan necessitates careful consideration and planning using HDFC home loan EMI calculator because it is a long-term and costly commitment. Borrowing without conducting adequate research may affect your financial well-being. When applying for a home loan, you must exercise extreme caution so that you do not end up with a lender or a product that does not suit you.

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