With various home loan options available in the market today, you might get confused as to which one to go with. To add to your dilemma, there are certain myths related to home loans that prevent you from availing one. This hearsay, in the absence of complete knowledge and proper understanding, can be a roadblock in availing the best features. Let’s bust some myths today.
Fixed rates are better than floating
It’s a common myth, many fall prey to. Choosing a floating or a fixed rate of interest depends on your own needs and goals, as both have their own merits and demerits. A fixed rate of interest means that you have a fixed monthly installment amount of installment. On the other hand, if you choose the floating rate, the interest EMI would vary basis the market fluctuations and hence, you can either end up paying lesser or higher than the prevailing fixed rate of interest in the market.
An illustration to show you the difference between the two:
Suppose an individual takes a home loan for 50 Lakhs for a period of 10 years / 240 Months. Let’s say during the application process/procedure the following were the interest rates:
- Fixed Interest Rate: 10%
- Floating Rate of Interest: 9.6%
The EMI in case if you choose a fixed rate of interest would be INR 29,683/- as opposed to INR 27,170/- when you choose a floating interest rate. This implies that you will end up saving INR 2,513/- per month. The amount might seem small at this point but it does make for big savings in the long run. However, the reverse is also true in case the market conditions change and the market rate crosses 9.6%. In that case, you will end up paying a higher EMI amount.
Shorter loan tenure is always better
You might feel that the tenure of your loan is short. However, this is not true. The tenure of the loan should be chosen as per your repayment. A shorter tenure also implies a higher EMI which can adversely impact your monthly payouts.
You will not be able to avail a home loan with low credit score
You need not get disheartened if you have finalized your dream home, but have a low credit score. You can still avail a home loan with a low credit score. There are a lot of other factors that determine your home loan, like your repayment capacity, occupation, age, city, etc. Lenders do not deny you a home loan only if your credit score is bad.
You should go for lenders who offer the lowest interest rates
A lender with a low-interest rate is not always the best. There might be some hidden charges or other terms and conditions that you could miss. A home loan with Finserv MARKETS guarantees you transparency with no hidden charges. While choosing a lender, look for features that match with your goals and repayment capacity. For e.g., if you would want to pre-close your loan, you could choose the one which has nil or least repayment charges. Do thorough research before you select the lender regarding all the features.
Falling prey to these myths not only restricts you from taking the best home loan but also creates unreal doubt in your mind. It is necessary that you understand everything about a home loan from reliable sources and then take an informed decision.
With Finserv MARKETS, applying for a home loan is a simple and completely hassle-free process. What’s more? The process is online and requires minimal paperwork and if you are eligible for PMAY scheme, you can enjoy additional benefits under Pradhan Mantri Awas Yojana scheme. So why wait? Get your home loan with Finserv MARKETS today and make your dream of owning a home, a reality!
“Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!”