Buying a Home With a Mortgage: Points to Avoid

Manjiri Gaikwad M

Introduction

The very first thing to start a business or to earn a house for a man is ‘Capital’. The next thing is to get this through a loan. When it comes to loans the very initial scenario that strikes the mind is the property or an asset that is to be kept as a mortgage. As difficult as this word sounds, well in practice it implements the same.  As per the BankBazaar’s aspiration Index of 2019, buying a house was found on the top list of goals in life in a survey of over 1800 salaried men and women across twelve cities of India. Hence, in order to help people to buy a house, they go through the following points and mostly try to avoid it. 

High Interest Rate

Whenever one borrows money from a bank, the very significant thing one should take into consideration is the interest rate. If the interest rate is low what are the installments time. If in case the interest rates are high what is the benefit of mortgaging , is it affordable for one to pay this rates at the appropriate time. Usually, the interest rates offered by SBI bank are 8.80% to 9.30%. The interest rates depend on the credit score. Credit score actually decides whether the customer will be able to pay back the loan to the bank. If yes then the percentage is determined by credit score. And the percentage of interest rate of the mortgage is different for different banks. i.e. for Government Bank and Private Bank or through Brokers. According to the finacialexpress.com, it is suggested that the credit score should be greater than 750 so that to get low interest rates.

Unfeasible Installments or Deadlines

When we talk about loans, be it any kind of load. The most concerning thing here is in installments. Now installments may differ differently as per the rules of banks or brokers. One needs to check if the installments are feasible or not in order to check the affordability . As mentioned earlier the credit scores play an important role in this entire process. It is thus crucial to go through the credit score, so that the interest rates are known. And then depending upon the interest rates the installments or the amount can be decided that is payable to the bank every month in exchange for the mortgage amount. It is found that people always fall prey to the titles like ”Get your dream house at no unbounded dues.” No bank or any authorized organization will give a loan to customers without their personal profits.

Fall Prey to the Value of the Mortgage

Now, when we say the value of the mortgage , what actually this term means. Whenever an Asset or a Property is to be mortgaged one has to know the actual market price of that property. Consider the eg. If customer A is trying to mortgage a piece of land to get a loan from a bank. Then an analysis on that piece of land like how old the land is? Which area is it situated in? Is it a village area or a developed area? What are the resources for development in that area ? These all questions are nothing but the analysis that calculates the actual market price or value of that mortgage. Mostly when the consumer is unawareI  of the area or the market then there is a high possibility that he or she may get fooled by the broker for the market price. And hence this will ultimately affect the amount or the loan that is achieved.

Not Paying Bills on Time

Whenever you are going for mortgaging, one thing that customers should keep in mind is the credit score. Along with the credit score they should also keep a note on paying the bills. Once, the bank or the other loan giving authorization can see that the customer is able to pay his or her bills on time like the electricity and water bills. They have a belief that this person is capable of paying the mortgage loan also. Hence, the customer should pay all his or her bills on time.

Switching of the Job

Switching jobs may sound like a very good step in one’s career growth. But when you look at it in this aspect, then it is analyzed that switching jobs may cause a problem if you are planning to mortgage a property for a loan. It is suggested that the status of the job should be steady for at least two years. So that the bank is assured and confirmed that you are capable enough to pay the bills.

So, if you consider the above precautions you can find that owning a house is not that hard, only you need to invest in the right things at the right time.

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