How to Keep Away from Defaulting Home Loan?
Loans are availed by the people for many different reasons. Everybody would not hold enough money to address the regular needs in life. Talking about buying cherished home is an excitement for first time home buyer. Your excitement should not overshadow the requirements that you to buy a dream home. It is mandated for a common man to approach a home loan lender to own home. With the recent slash in home loan interest rates, people prefer to buy homes as opposed to rent one. Getting an approval for home loans leaves you high spirits, one has to maintain this spirit till the repayment of the loan is complete. The current article speaks on tips to keep away from defaulting home loan.
Income and debt ratio
Sometimes, a borrower stays eligible for more amount than needed. You should always avail the amount that is needed. Analysing your repayment capacity is important too. A loan that is availed without considering affordability may lead you to default the loan as you have to pay monthly interest rates towards larger loan amount.
Timely repayment is needed
When you take a loan for a big need like procurement of home, repayment is very important. Prioritize mortgage loan repayment in the monthly budget. Cut other monthly expenses and add it to repayment of the home loan to stay out of defaulting your home loan, otherwise, you will end up losing your dream home.
Don’t borrow to invest
Lender sanctions 80% of the mortgage loan in most of the cases. The borrower has to arrange the rest of the amount as down payment. You should never borrow money from the friends and relatives for down payment of the home because you may have to repay the amount in the shortest time possible along with the EMIs on your home loan. If you fail to manage finances effectively, you may end up defaulting your loan.
Insurance on big ticket loans
Uncertain situations may crop up anytime in life. Don’t let these uncertainties lose the grip on your dream home. The best way to do is to take an insurance on these big ticket loans with the term plan of the same amount so that your family is not saddled with unaffordable debt in any uncertain situations.
Shop for low-interest rates
Lower interest rates make houses more affordable to the borrower. Many of them take house loan for a long term. Keep close to the happenings in the interest rate changes in the market. When RBI changes on the base rate formula which decides the way which banks calibrate their interest rates. If you find a bank offering cheap home loan interest rate, switch your home finance, calculating the benefits and costs you incur. You will enjoy the gains of switch only when there is a difference of two percentage points, otherwise, penalities on prepayment of the old loan and processing charges of the new loan will eat up the benefit of your switch.