Taking a home loan is not a big deal but choosing a lender and planning for a better loan is a wiser step. But when you go for applying for a home loan you will face some misconceptions. Here I am sharing those so be prepared about these and plan your loan in a better way.
Better to have shorter tenure
This is one of the misconceptions that if you have a shorter tenure than this affects your loan. Generally, it is good to have shorter tenure that you can get free from the loan earlier but it doesn’t create any effect if you are going for larger. So, you should choose the tenure according to your requirements.
Primary focus on paying off
This is not true in many manners. Although you can get free by paying off the loan it is not a healthy habit for your financial status. To maintain a good financial score you should manage all your finances well. Creating a good financial score will always help you in the later stages of life.
Fixed-Rate of Interest in Better
This is one of the major misconceptions that many persons may have while applying for a loan. But on the other side floating interest rates are better options. That can facilitate you with many opportunities in the future while repaying the loan. By using a floating interest rate you have the option to pay lesser in the future that depends on the repo rate, SLR, etc.
A Person Should never Refinance
Refinancing of home loan is a good step that provides you facilities like lower interest rates and larger tenure. But it should be done after complete planning and research. You should research well that which lender would be perfect and which will facilitate you with these features. Changing a lender is a vital step if your current lender creating any kind of a mess.
Prepayment or Foreclosure has Penalties
This is another misconception that comes in mind of the borrower. There are plenty of lenders are available in the market that doesn’t charge anything extra if you are prepaying the amount. Although, it doesn’t lower your interest rates or your repayment amount in many cases. So, to get better benefits you should choose a lender that provides better prepayment options.