Thursday, September 13, 2018

Rules to follow when taking a mortgage loan

Rules to follow when taking a mortgage loan

If you need a huge amount of money to meet your immediate financial needs, then a Mortgage Loan (LAP) is the best alternative among all other financial options. It not only comes with lower interest rates but also offers longer tenure and flexibility of usage. A mortgage loan can be used for several purposes such as financing your child’s education, managing your wedding expenses, expanding your business, or even handling unforeseen medical expenses. However, before applying for the loan, you must keep few things in mind to reduce your overall debt burden.

Here are 6 main rules that you should follow before signing the agreement:

mortgage loan

1. Borrow as per your repayment capacity: Determine the loan amount that you can easily repay in future. If you apply for a loan amount which is higher than your eligibility, it can lead to rejection of your loan application. Further, having high monthly installment scan eat a major portion of your income and you might have to compromise on some important financial goals like your retirement plan, child’s education, etc. So, make sure you choose the correct loan amount that you can comfortably repay in future.

2. Repay EMIs timely: Defaulting on your loan EMIs can land you in trouble. You will not only be charged penalties for non-payment, but it will also have an adverse effect on your credit score. It will reduce your chances of getting a mortgage loan in future. Hence, it is always advised to repay your loan in a disciplined way as any late payment or default will reflect in your credit record.

3. Go for a short tenure: LAP comes with a flexible tenure ranging from 5-30 years. If you opt for a longer tenure, your EMIs will be lower. It may look financially attractive to you in the beginning, but you may end up paying more interest in the long run than a shorter tenure loan. In case you can’t afford bigger EMIs when you purchase a loan, you may ask your lender to shorten the tenor by increasing EMIs in future when there is a rise in your income. Doing this can reduce your loan burden.

4. Get insurance with big loans: If you are availing a huge amount as a loan, make sure you also take an insurance cover. Insurance amount can reduce the debt burden on your family in any unfortunate circumstances.

5. Read the fine print of the agreement carefully: Read your loan agreement carefully. Sometimes, lenders may verbally agree to certain points but in the end whatever is present on the paper will only be taken into consideration. So, it is best if you could just spend some extra time reading the document carefully rather than getting stuck in complications later on. Never sign on a blank loan paper even if the salesperson asks you to do so.

6. Never leave a doubt: Ask questions if you have any doubts, because it is very important to be aware of every term and condition mentioned in the loan. For your satisfaction clear out everything beforehand and your dream home will be yours in a hassle-free manner.

Conclusion: So, if you are in urgent need of money, you always have the option to opt for a mortgage loan. Just follow the above-mentioned rules to crack the best deal and reduce your overall debt burden.

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