You must have heard of home loans. All banks, credit companies and financial institutions offer home loans to their customers. Although banks offer interest rates on the principal loan amount, people find it suitable to build their houses with the help of these banks. In this post, we will discuss some common myths widely popular worldwide and burst them with proper information.
Having a piece of basic knowledge of personal finance is important for any person. Those who find it difficult to understand how the loan works and the benefits of getting a loan can look for professional help.
For those who don’t know anything about home loans, home loans are money you can borrow from a bank or a financial institution by providing necessary documentation and an agreement to pay your loan back to them in time with interest. For most home loans, a maximum of ninety per cent money you can get as a loan. Let’s look into those myths and discuss the reality.
1. Not All Home Loans Are Associated With High-Interest Rates
There is a common saying in the market that you will have to pay heavy interest if you want to take a home loan. This is a complete myth. Different banks and credit companies offer different interest rates for their loan service.
For example, ICICI bank home loan offers a different interest rate than other banks. When choosing a home loan, you should look for the lowest interest rate. Take expert help whenever you feel necessary.
2. The Bank Will Penalise You In Case Of Delaying
Another very common myth being the bank will impose heavy penalties on you if you fail to pay your amount in time. Although, technically, banks can impose a penalty, they don’t do that. Interest rates will be imposed unless your loan is fully paid. The more time you will take to repay your loan, the more interest you have to pay.
3. Does The RBI Set The Interest Rates On Home Loans?
Many people ask this same question. Is it the RBI that decides the interest rate on home loans? No, they are not. Although RBI governs all the banks, they don’t have to say anything regarding home loan interest rates. There are some factors that the RBI controls that have some effect on these interest rates. Different banks decide their interest rates on home loans.
4. Importance Of Credit Scores
There is no doubt that a good credit score can help you get a home loan easily. However, it is not the only factor. Those with a relatively poor credit score can apply and get a home loan if other factors are all right. There are several criteria for applying for home loans. Look for professional help if you find it difficult to apply for a home loan.
5. Short-Term Loans Are Better
Many think short-term loans are easy and much better than home loans. Although repaying your loan quickly is good, short-term loans can cost you heavy instalments. High monthly instalments are difficult to maintain.
We have discussed some of the most popular myths in financial sectors regarding home loans. Please consult with a professional if you need any help regarding loans.