Owning a house is one of the biggest achievements of a person. Getting a good deal on a property in the UAE is a daunting task. There are so many agreeing terms which makes the buyer rush through the mortgage application process. There are several things that you must avoid just so that you are not missing out on a good deal. Securing a mortgage is rewarding but it is also risky when not managed correctly. You have to do extensive homework before deciding to take a mortgage, you can also talk to a mortgage specialist as this is a huge decision and it is crucial that you avoid making mistakes.
What should you avoid while getting a home loan?
Getting a home loan is a huge responsibility. You must be well aware of the consequences, the terms, and conditions. You can learn more about the home loan from those who have already taken a loan. Following are the things you must strictly avoid:
- Not getting a pre-approval: When you get a pre-approval, you will know how much you can afford to spend and this can speed up the home loan application process. When you get a letter from the bank, you are in a better position to bargain for a good deal with the home loan providers. If you don’t have a pre-approval, you may have had your eye on a certain property but you may not be qualified to buy the same as you cannot afford it. Getting a pre-approval resolves this issue and puts you in a better bargaining position.
- Not fully completing the application form: The banks will take longer time to respond if your application form is incomplete. Ensure that all the relevant information is correctly filled in.
- Providing inaccurate information to the bank: Lying or misinforming is never a good idea. Since the home loan is a big ticket item, the banks will look closely at the details represented in the application form. They will then cross-check with your credit report. So, if you have lied in your application form, they will find out. This will lead to rejection of the home loan application. The banks will also go on and put you in the black-list, which means that you can’t use any of their banking facilities in the future.
- Not reviewing the terms and conditions: Reading the fine print is a must before signing any document. You must get your queries attended to before going ahead with the loan. The banks may have some charges that are mentioned in the fine print but they may not tell you while discussing the loan. You need to take your time and read through the application and ensure all the promises made by the agent are included in the contract.
- Not sticking to your budget: If you have made a budget, but the bank tells you that you can borrow more, don’t deviate from your budget. You may be financially strained if you are taking more than what you need.
- Not comparing: When you are getting a major loan like a home loan, you need to compare the benefits offered by various lenders. Don’t take the first mortgage that is offered to you. Know what else the lenders have to offer to you. You may end up finding the best deal when you do a lot of research and comparison.
- Not calculating the cost: When you are taking a mortgage, a majority of your monthly income goes towards servicing the loan. You must calculate your other expenses and check if you can afford to pay the monthly instalments and the application fee, appraisal fee, closing costs, registration fees, annual maintenance charges, etc.
- Not paying on time: There could be plenty of reasons why you may have to miss the deadline for paying the monthly repayment amount. But, you will have to re-evaluate as paying your home loan is a priority and everything else comes later. You can talk to your lender and ask for refinancing or reducing the interest rates or increasing the tenure if you are unable to repay on time. If you have delayed the payment for more than 30 days, it will show up on your credit report. If you have paid within 15 days, you will be charged a late payment fee.
- Not keeping in close contact with the lender: Always keep in close contact with the lender. If you have changed your job for a higher pay, you will have to inform the bank. They will require new documents and salary transfer.
You will have to ensure that you avoid the above and this will ensure that you get the best home loan. You will also be able to stay on top of things when it comes to your finances and your loan.