When something is popular, there will always be certain things about it, which people do not understand. This results in a lot of things which weren’t true becoming myths. And soon enough people actually start believing these things. Here we are going to tell you about a few home loan myths.
The title of the property is the bank’s responsibility: Many believe that because the home loan has been approved, the title of the property is clear. What you need to remember is that a home loan can be considered as a personal loan and that the property papers act as collateral against the home loan. A huge collateral is required and the buyer is solely responsible for the title of the property.
Longer loan tenure is good because of low EMI: Many people believe that the longer the loan tenure, lower is the EMI. This plays a huge part in the decision making of a borrower. However what happens is that it since the tenure is for long period, you end up paying more than what you should be paying. Unless and until you just cannot afford the small term tenure you should always go for the combination of high EMI and short loan tenure.
Prepayment penalty: Prepayment of a home loan will attract penalty only if it is undertaken within 3-5 years of taking the loan. The nature of the time period in which you can attract the prepayment penalty is when is varied across different lenders. Some banks might even opt not to charge the prepayment penalty.
RBI Decides the interest rate on Home Loans: This is again a myth that it is the RBI which decides the interest rates on home loans. What you need to know is that RBI cannot directly decide the home loan interest rate. It tries to ease the decision which has been taken by the banks by changing the repo rate.
So before you apply for a home loan remember these things and make a sound decision on the details of your home loan.
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