Thinking of Taking a Home Loan? Don’t Miss These 6 Crucial Checks – Most First-Time Buyers Ignore Them!

Buying your first home is a major life milestone. It gives you a sense of security, accomplishment, and a space to call your own. But let’s face it — most of us don’t have the full amount ready in cash. That’s why home loans are often the most practical way to turn that dream into reality. However, many first-time home buyers make mistakes when applying for a home loan — mistakes that can cost them peace of mind and extra money.

To help you avoid these common pitfalls, here are 6 critical things you must check before you take a home loan from any bank

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1. Assess Your Financial Health First

Before you even step into a bank, take a good look at your financial condition. Ask yourself:

• What is my monthly income?

• What are my existing expenses?

• Do I already have any loans or EMIs?

• How much money can I comfortably set aside every month for a new EMI?

This self-assessment will give you a clear idea of how much loan you actually need and how much you can realistically repay every month. Many people get lured into borrowing large amounts just because they are eligible for it. But that can lead to long-term stress if EMIs become unmanageable.

Pro Tip: Use online EMI calculators before applying. Stick to a loan amount where the EMI is no more than 40–45% of your monthly income.

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2. Pick the Right Loan Tenure

Home loan tenures usually range from 10 to 30 years. A longer tenure might look attractive due to lower EMIs, but it comes with a hidden cost — more interest over time. On the other hand, a shorter loan tenure may mean slightly higher EMIs, but you save lakhs of rupees in interest.

Here’s a quick example:

• Loan Amount: ₹40 lakhs

• Interest Rate: 8.5%

• Tenure: 30 years EMI = ₹30,768, Total Interest = ₹70+ lakhs

• Tenure: 15 years EMI = ₹39,000, Total Interest = ₹30+ lakhs

See the difference?

Pro Tip: Choose the shortest tenure your budget allows. You can also opt for longer tenure initially and prepay later when your income rises.

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3. Don’t Skip Making a Bigger Down Payment

Banks usually finance up to 75–90% of the property’s value, depending on the loan amount. The rest is your down payment. While the minimum may be 10–25%, it is always better to pay more if possible.

Why? Because a bigger down payment reduces your loan amount, lowers your EMIs, and improves your chances of loan approval.

Also, a smaller loan means less interest and a stronger financial position.

Pro Tip: Try to pay at least 20–30% of the property’s cost upfront. Avoid emptying your entire savings — keep some emergency funds aside.

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4. Get Loan Insurance to Protect Your Family

Most people focus on getting the loan but ignore what happens if something goes wrong — like a job loss, disability, or even death. In such cases, your family might struggle to repay the loan.

That’s why home loan insurance is very important. It ensures that your loan will be paid off in case of any unfortunate incident. Some banks offer loan protection insurance bundled with your home loan, either as a single premium or as part of the EMI.

Pro Tip: Always ask your bank about loan insurance options. It’s a small price for peace of mind.

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5. Compare Offers from Multiple Banks

Every bank claims to offer the “lowest interest rates” and “best deals.” But not all offers are the same. Interest rates, processing fees, foreclosure charges, and customer service can differ a lot.

Here are key things to compare:

• Interest Rate (Fixed or Floating)

• Processing Fee

• Prepayment/Foreclosure Charges

• Loan-to-Value (LTV) Ratio

• Customer reviews

Also, check your credit score before applying. A good score (750+) gives you better bargaining power and can get you lower interest rates.

Pro Tip: Don’t blindly go with your salary bank. Use third-party websites to compare offers and read user reviews before deciding.

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6. Read the Loan Agreement Word by Word

This is one of the most ignored yet most important steps. Once your loan is sanctioned, the bank will give you a loan agreement to sign. Many people are so excited to get the loan that they don’t bother reading it.

Big mistake.

This agreement contains important terms about:

• EMI start dates

• Interest calculation method

• Penalty for late payments

• Charges for prepayment or foreclosure

• What happens in case of default

If you sign without reading and later face a dispute, you’ll have no legal standing.

Pro Tip: Take the agreement home, read it in detail, and clarify doubts before signing.

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Bonus Tips for Smooth Home Loan Experience

Apart from the 6 major checks, keep these bonus points in mind:

• Maintain a clean bank statement: Avoid bounced cheques or large unexplained withdrawals before applying.

• Save for other charges: Registration, stamp duty, legal fees, and interior work can add 5–10% extra cost.

• Plan for EMI holiday: Some banks allow 1–3 months of grace before EMI starts — useful when shifting homes.

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Common Mistakes People Make

Here’s what many first-time buyers do wrong:

• Taking a bigger loan just because they are eligible

• Not maintaining a good credit score

• Choosing the lowest EMI without realizing the higher total interest

• Ignoring hidden charges like documentation and legal verification fees

• Not planning for sudden expenses during the house-buying process

Avoid these, and your home loan journey will be much smoother.

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Final Thoughts

Taking a home loan is a big commitment — possibly for the next 10–30 years of your life. So, take time to plan it right. Do your research, understand your financial capacity, compare offers, and read every document carefully.

Remember, it’s not just about buying a house. It’s about buying peace of mind.

A home loan done right can be a blessing — but done in a hurry, it can become a burden.

Make smart choices now, and your dream home will never become a financial nightmare.