Mistakes first-time home buyers should avoid

If you’re a first-time home buyer, you can avoid buyer’s remorse by studying some of the most common traps and how to prevent them.

Not setting a budget

Have no distinction house purchase the plan in place is the greatest folly of potential home buyers. The first factor to consider is your financial capacity. If you don’t know how much you can afford to spend on a home, you’ll be in big trouble later on, especially if all of your income goes to your home. It all starts with a budget, which is done after taking into account other major expenses, especially if you already have other loans to repay.

Inadequate research

You stand to lose your money and your home if you don’t thoroughly research the developer of the project you choose to buy a home from. There are plenty of overnight builders out there, who don’t have an established track record or credibility and are looking to make a quick buck from oblivious homebuyers. Also remember that the sanction of your home loan may depend on the reputation of the developer. look for it RERA (Real Estate Regulatory Authority) website to check if your developer is registered as a bona fide real estate company. So, if you have any problems with the timely delivery of your home, you can file a complaint on the RERA website.

Not comparing loans

Without a comparative study of the different mortgage loan offers, you could end up paying a much higher interest rate than what other credit institutions offer. Remember that there is a large pool of lenders who offer a lower interest rate than the bank you have an account with. It is therefore prudent to make a comparative study of all banks and non-banking financial institutions (NBFC) to choose the best capacity of interest rate, term and repayment terms.

Not checking eligibility

Not checking your credit score periodically, especially when some banks offer this service for free these days, is a big mistake. In fact, it is a good idea to go for a pre-approved loan to check your loan eligibility. This will give you an indication of your financial capability and help when looking for a home.

Do not note the deposit

Most home borrowers are unaware of this crucial aspect of the borrowing process. No lender, not even your bank, sanctions a 100% home loan amount. They usually lend around 85-90% of the cost of the house you intend to buy. In addition, your loan is not sanctioned if you do not pay the 15-10% deposit, which is also a kind of “trust deposit”.

Too confident on the loan

The real estate market is tilting in favor of homebuyers and there is no shortage of lenders; however, it can be quite upsetting if your home loan application is denied due to various factors such as low credit score, existing expenses, insufficient funds, etc. Many home borrowers often feel that a pre-approved loan can help them get a loan—it doesn’t!

Pre-approved loans are based on some basic calculations; they are not based on a detailed analysis of the borrower’s profile. Therefore, it does not mean that your loan is secured. During the loan disbursement process, loan guidelines may change and this may affect the borrower’s ability to repay a loan secured by collateral. In addition, after pre-approval of the loan, if the financial situation of the borrower deteriorates, it could affect the disbursement of the loan.

Ignore tax benefits

It is inexcusable if you are a taxpaying Indian citizen and are unaware of the tax benefits you can avail on a home loan! There are advantages of tax deductions for the interest paid on the housing loan, in terms of interest paid on the housing loan during the pre-construction period, on the repayment of the principal, for stamp duties and fees of registration, the additional deduction under Article 80EE and Article 80EEA as well as for joint mortgage.

Choose an unaffordable good

We all want to live the good life. But is it worth trying to live the unaffordable life? This can be a huge strain on your resources, especially if you take out a larger loan to buy an expensive home.

Source: Mumbai Mirror

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