For most borrowers in India, loan against the property is the last resort. Property is one of the most cherished and respected assets in India. Therefore, it is not considered as long as you have alternate options available. That’s why, if you plan to avail a loan against property , you must avoid following mistakes. This way, you can enjoy the complete value of the property as a residence or commercial property. At a same time, you can utilise the principal amount as and when necessary. You can expand your business or educate your children. It is your call. But, use this valuable loan against property carefully. Here are three mistakes you must avoid.

Mistake #1 – Ignore your line of credit

This is very crucial while applying for a loan against property in India for three reasons.

* You cannot meet the eligibility criteria for loan against property in India with low credit score and bad credit history

* You cannot get a LAP in India if you already have taken too much credit to repay it with your active income easily

* You cannot get the best interest rates for loan against property if you are a guarantor or co-applicant on other mortgages

You need to be in a position to repay this loan with your monthly active income. Your line of credit can pose a great threat to LAP EMI. That’s why; watch out for your mortgages.

Mistake #2- Forget about LTV

You need a certain amount for business or personal reasons. That’s why most borrowers are looking for LAP. But, the trick is that you will not receive the entire value of your property as a principal amount. A select amount will be credited to your bank account. It will be based on the value of the property and the loan to value ratio. That’s why; you must ensure that you have accepted the loan that allowed you solve your problem at hand with this secure mortgage. So, find a suitable lending organization. It should be offering a suitable principal amount to meet your current requirements.

Mistake #3 – Default EMI on a loan against property

When you get a LAP in India, you must pay EMI consistently. Most people consider a LAP during a financial crisis, so it is very difficult. However, the rules about the loan repayment do not always allow you to miss your EMIs. Therefore, personal finance experts do not recommend a loan against property with unfitting interest rate. Take a loan you can afford to repay and repay it consistently. The consequences of missing EMI can be disastrous.

So, take care of your asset as you borrow against it. All the best!

There will come a time, at some point in your life, wherein you will face an emergency financial situation. In this situation, while there may be plenty of options available, the personal loan has always been a viable option for many.

While there are plenty of benefits to this loan, like any other loan, you will need to fulfil certain criteria. A failure to do so would not only result in a loan rejection but also the possibility of a debt trap. With a few simple precautionary steps, you can avoid making your emergency financial situation from becoming more drastic than it currently is. By being aware of the possibility of certain loan mistakes, you can learn to avoid them. Given below are some common mistakes to avoid:

Failure to check your credit report: When you borrow funds or repay a debt, it can affect your credit score. Therefore, if you have taken a previous loan, or paid off a previous credit card debt, it is crucial that your previous lender updates your credit repayment to the credit bureaus. As most lenders make it mandatory to check a lenders credit score before reviewing the loan application, such data can affect your loan application. Alternatively, any clerical errors on the credit bureau’s or lender’s part may also lead to wrong information being included in your credit report. This, in turn, can affect your loan application. To avoid such a situation, a quick glance at your credit report is a must. In this way, you can take the necessary steps to correct your report before beginning the application process.

Failure to review your repayment capacity: This is another mistake made by plenty of personal loan applicants. These individuals often believe that they can afford any loan amount, just because the loan application process is convenient. In this way, the end up over-stretching their finances by borrowing funds which are beyond their repayment capacity. Additionally, they also may end up underpaying, which can lead to increase debts and can even affect their credit score. This would lead to longer repayment tenures and higher interest payouts which in turn can affect your current financial situation. To avoid such a situation, you must take into account your daily living expenses, current debts, and investments for future financial goals.

Submitting multiple loan applications: When an individual makes a personal loan application, lenders often report it to the credit bureau. This, in turn, gets recorded in the enquiry section of your credit report. When approaching the next loan application of a different lender, the lender will review your credit report, including the enquiry section. Such a report may not work in your favour as you may pass off as a hungry credit borrower. Therefore, they will be cautious when approving your application, which may either lead to high rates or a possibility of rejection. To avoid this situation, you must carefully consider your loan application. Conduct a thorough research of all the lenders and their offering before you apply for a loan.

Most borrowers can see that using a housing loan EMI calculator is easy. You can use it to calculate monthly home loan EMI effortlessly. However, home loan EMI is a vital expense for any borrower. It is almost 30% to 40% of your income. So, it is better to avoid some typical mistakes while using EMI calculator for home loans.

Choose wrong timing

Some people identify the property they intend to purchase. Then, visit a housing loan EMI calculator to calculate the monthly home loan EMI. It is almost futile if the chosen property is too expensive. Multiple home loan EMI calculations won’t fit it into your monthly income. So, the right time to visit an EMI calculator is before finalizing an approximate cost of a property. Your affordability will play a vital role in buying a dream home if you need a housing loan. So, get a clear understanding of housing finance and an approximate cost of a property you can afford before starting a home hunt.

Go literally

EMI calculator for home loan is an online version of the basic calculator. But it can process amortization table and other aspects of the loan. But, these figures will remain indicative. They cannot be taken literally accurate. Several factors will influence principal amount, home loan rates, and tenure. So, this tool is designed to give you a rough idea about the home loan calculations. They will allow you to make necessary changes to make it an affordable loan. But, the figures can change as these numbers indicate towards the real possibilities.

Skip other aspects

EMI calculator for a home loan cannot process the difference between hybrid and floating home loan rate. It cannot differentiate between step-up and step-down repayment option in terms of home loan EMI. So, EMI calculator is just a starting point for home loan calculations. Any finance-savvy individual understands that he or she has places to go. They have to consider several aspects of the home loan package before finalizing the lender and other details. So, use this tool. But, it is just a first step.

Talk to the relationship officer of a housing finance company. Meet with a home loan consultant. Understand the scope of housing loan. This will allow you to use the EMI calculator well within its context. That is the smart way to avoid the typical mistakes and make the most of all the resources available. Your dream home is worth it. Furthermore, home loan is a financial commitment for next 15 to 30 years. So, make it carefully and strategically by wrong usage of tools.

Home loans are complex yet worthwhile products as they offer you a chance to own your dream home. There are, however, a few mistakes that people make while making their home loan EMI calculations. Understand and avoid the same to make better financial choices.

1. People don’t undertake extensive research.

Any potential borrower can go online and find out important details from reliable third-party websites. Bank websites also promote their own products and services. There are also ample other websites that offer home loan EMI calculators in India . In addition, they also offer sophisticated financial advice on home loan calculations. Availing these services help you to understand the potential expenses that you are normally unaware about.

2. Factor in the minor expenses.

There are several expenses included in the home loan calculations, some of which are trivial and don’t seem to be important enough today. However, they are sizable collectively. Hence, it is important to take them into account from the start. Here are a few examples of such minor yet relevant expenses:

* HLPP
* Stamp duty
* Processing fees
* Additional expenses during the loan term such as prepayment penalties, switching charges

When you use the home loan calculator in India , include these amounts in your principal amount before you calculate your EMI.

3. People rush to seal the deal.

Most borrowers are in a hurry to complete this process. There is nothing wrong with that; however, in a hurry, they tend to ignore important details. Some of these include:

* Credit Score: People understand that their credit score affects the loan in more ways than one. Yet, people don’t take the time to improve it before applying for a loan. This small step is crucial for loan approval and better interest rates.

* Negotiating Interest Rates: You can negotiate the interest rates with the home loan officers. This practice is neither announced nor encouraged. But, people who are patient enough to ask and negotiate can avail it.

* Terms and Conditions: Very few people attempt to understand the terms and conditions for the loan. This document includes quite a few important conditions for the home loan. For example, most people opt for fixed interest rates, assuming they remain unchanged. Yet, the fact is that it is higher than floating interest rates and susceptible to change over a period of time.

Most investors and business owners, who avail home loan services frequently for their businesses, understand these principles and incorporate them. Thus, it is important to examine your loan applications, credit scores, repayment strategies and relations with banking officers to get the best results possible.

When it comes to opting for the ideal financial aid, the personal loan has been one of the most preferential choices. Applying for this loan today is convenient, however, at the same time, it can become a financial burden if you take a wrong step. Given below are the common personal loan related mistakes you should avoid, should you ever need to apply for this loan.

When it comes to opting for the ideal financial aid, the personal loan has been one of the most preferential choices. Applying for this loan today is convenient, however, at the same time, it can become a financial burden if you take a wrong step. Given below are the common personal loan related mistakes you should avoid, should you ever need to apply for this loan.

Opting for more than one personal loan:
A personal loan, by nature, is an expensive affair. Although it will provide you with the financial support you want, you should opt for this loan as a last resort. However, since individuals can easily opt for this loan, many are prone to taking this loan for every small reason. Over time, taking this loan will be more of a routine, thus inculcating more than one loan. Although servicing more than one personal loan will offer you the ideal financial support, it will damage your current finances and save while also affecting your credit score. In this way, you should reconsider your loan application before proceeding to opt for more loans than you can afford.

Borrowing a loan amount you cannot afford
When it becomes convenient to get such a loan, it is easy to get carried away borrowing funds. In this way, many unaware individuals opt for borrowing an amount that will satisfy financial requirements more than required. When it comes to the time to repay the loan, the added interest rate will make it seem nearly impossible to repay. To avoid such a situation, opt for a loan that is 35 to 40% of your income. This income should be calculated after your monthly expenses. Also, try and avoid opting for pre- approved loan offers or loans that come with unbacked loan rates.

Applying for loan without reading the fine print
Most loan applications come with a fine print regarding the terms and conditions. It may seem convenient just to skim the surface of this contrast, without reading it in detail. However, if you sign the contract without going through the details, you will be putting yourself at a grave risk. If any dispute or misunderstanding between you and your lender arises, your lender can use the contract to challenge your dispute. If the terms of the contract are pitted against your challenge, you may end up losing the challenge. Do make it a point to read and understand the details of the terms and conditions related to the loan.

Opting for a long loan tenure
Many lenders will offer you a loan tenure that will be long. Although it may seem convenient to repay a loan that will take you more than 7 years, other factors will be affected. Factors such as the EMI will be affected by the loan tenure. While it may seem pocket-friendly, you will end up paying a lot more on your EMI’s than you expect. Use a personal loan calculator to figure out the best tenure that will suit your needs, while paying off your loan amount.

When you are approaching a bank or financial institute for a personal loan, you can always use the personal loan EMI calculator to help you select the best loan. While this tool is exceptionally helpful, one should know how it works. If you are unaware how it works, it might lead to several financial problems, especially when you will be using it to apply for a personal loan. The following are a few common mistakes:

It Is A Rough Estimate.

When you use the personal loan EMI calculator, you will be calculating your loan amount based on the combination of certain factors. This includes the combination of your principal loan amount, interest rate and tenure. You can be happy with calculation; interest rate depends on your income and repayment capability. Thus, it can change considerably. It isn’t under your control. So, it will be a mistake to assume that the EMI calculated by this calculator is a final loan offer. It is a rough estimate that is open to change.

Don’t Exploit A Basic Interest Rate.

As mentioned earlier, the personal loan EMI calculator uses a combination of different factors to calculate the best advance credit rate for you. While it is easier to adjust the loan amount to your requirement and the payment tenure as per your needs, it is hard to get a desirable interest rate. If you try avail as much loan possible with the offered interest rate, you may land in trouble. Your final personal loan offer may have a higher interest rate. Thus, you may land up availing a personal loan you cannot afford to repay. So, do not assume that offered personal loan interest rate is final till you receive an official offer.

Don’t Use Up Flexible Loan Tenure Entirely.

A personal loan can last anywhere between 1 to 5 years. In this course of time, several things can change, for example, you salary might increase or you might change your job. At such times, you might want to apply for another loan, for example an automobile or home loan. However, your risk increases due to previous unpaid loan. This prepayment comes with a prepayment charge. Therefore you will have to pay more than your regular EMI just to get rid of the previous loan. Don’t extend loan tenure beyond a certain point while using a personal loan EMI calculator. This can be a common mistake because it may lower EMI but increase your interest.

So, understand the potential value of this tool and use it to your best interest.

Most borrowers can get bemused by this thought process as to how can someone make a mistake with an EMI calculator in the first place? However, people make extremely important decisions about the properties they look at or consider buying based on the EMI calculator. Hence, invariably, first timers are more prone to the following mistakes:

EMI calculators do not consider down payment, processing charges et al.

An ideal home loan calculator will assist in making relatively accurate calculations for basic understanding of the details. The figures most people have ready when they consider home loan are far from accurate. So, some people fail to consider that they will have to pay almost 15% to 20% of the total cost of the property as the down payment before they get a housing loan. Home loan calculators cannot anticipate and include ancillary charges like processing fees, home loan protection plans, etc. So, do not take a loan without considering all these amounts that will get added into the cost of the property.

EMI calculators for home loan do not dictate actual interest rates.

Some home loan calculators in India have a basic interest rate in their calculations. Most people, however, make home loan calculations with such a rough number. The truth is, interest rates available for you will be defined by several external and personal factors. Banks or housing finance companies will see your CIBIL or FICO credit score, earnings, assets, liabilities and professional track record before suggesting the interest rates.

So, do not include the lowest interest rate available in the home loan calculations and calculate your monthly home loan EMIs as per that. Discover the range of interest rates that you can afford to repay easily. Hence, you will know better than to enter into the contract with an unreasonably high rate of interest for your home loan.

EMI calculators cannot suggest the right home loan tenure.

Figuring out the property you plan to buy will help you to choose the principal amount. Your lender, in turn, will select the rate of interest for that housing loan. You can choose the tenure of the home loan to suit your financial circumstances. Most people want low EMIs; though they ignore the amount of the total interest it can lead them to. Some people understand that and plan too risky a tenure that can threaten their property. Home loan calculators in India cannot select the right tenure for you. If you are a first timer who is fairly new to personal finance, take the help of an expert, who can ensure the right balance for you.