4 Common Mistakes made by First Time Home Buyers- Kotak Bank

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06 AUGUST, 2019

People often tend to make mistakes while doing something for the first time. Some of them can be rectified depending on the magnitude of the error. However, making mistakes while buying a property may have long-lasting effects. You should gladly indulge in all the essential preparation necessary prior to purchase – from choosing your home loan financier to deciding your budget, to facilitate your dream of owning a home. As a buyer, you have to be cautious and thoughtful from inspection of the house to selection of home loan plan. Paying attention to the details always leads to delightful results! Here is a list of some common mistakes made by first time home buyers

Not inspecting the home

The sellers of the house make buyers skip inspection to accelerate the purchase process of the property. Buyers also take decisions hastily and buy the house without proper investigation. This is a very wrong thing to do. You would not notice small niggly problems like bad wiring, plumbing issues or a faulty roof without appropriate inspection.
The inspectors thoroughly examine the house and report any faults before closing a deal. Then, you can ask the seller to fix all such issues. However, once you have bought the house without an inspection, every problem it comes with, now becomes a financial liability.

Borrowing more money

People visit different properties, fall in love with them and end up availing loans of higher amounts to buy it. Although home loan eligibility is based on the buyer’s credit score, sometimes lenders approve a larger loan than a borrower can afford. This leads to some serious financial issues in the future.
You can own your dream house by planning your budget and making smart decisions like choosing an affordable home loan plan. The low EMIs will regulate your financial budget over time and will eventually enable you to build towards having a sufficient savings corpus, which you can use to transform the purchased house into your dream home.

Doing less research

Several financial institutions in the market provide a quick home loan. There are many home loan plans specifically tailored for different situations. Many people avail of a home loan plan without any background research, which keeps them from getting the best plan that suits their needs. It seems a tedious job to get information about all appropriate plans. When you educate yourself by doing thorough research, making the smart decision becomes easier.

Selection of the right home loan plan

With every borrower’s risk appetite being different, choosing home loan plans based on collective consensus may not always work in their favour. Homebuyers need to consider many parameters amongst which loan repayment tenure, down payment, opportunities for partial prepayment are included.
For example, many people choose a shorter tenure in order to pay off the debt in a relatively shorter time. However, this impacts other expenses – whether it is planning for that long-awaited vacation or indulging their loved ones with gifts of affection. On the other hand, some borrowers prefer availing an adjustable home loan for the sake of less rate of interest without realising that the interest and the amount required to repay the loan fluctuates with the market.
Deciding to purchase your own home goes a long way in planning for your family’s future. If you are a first-time homebuyer, it is vital to plan your goals while accessing your current financial status. Choosing the right bank to avail a home loan will then become easier, making the entire process of becoming a home-owner a smooth one.

Common Mistakes made by First Time Home Buyers

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