India has one of the largest ratios of home ownership in the world. Recent studies show that 8 in every ten households own a home, and only 28% of the urban population lives in rented properties. This puts India ahead of countries like the United States, the United Kingdom, and Germany.
Such a high number of real estate ownership can be credited to a relatively lower price, more inclination to invest in immovable assets, and the availability of financing options to pay for the property. As such, self-employed or salaried professionals like CAs can quickly secure a home loan for Chartered Accountants to buy a new house.
However, despite the ease of applying, there are certain things a CA should consider before he or she seeks a home loan. Avoiding these common mistakes will ensure that you successfully apply for a secured loan and face no trouble repaying the debt.
The following are some of the significant mistakes chartered accountants should avoid when taking a home loan.
>> High Down Payment For The Property
You should carefully consider the amount of down payment when you purchase a house. Paying a higher percentage of the total price can strain your overall budget.
You can apply for a CA loan to purchase a house and reduce the financial strain.
>> Higher Interest Rate
The interest rate levied on a home loan may vary between lenders. Choose a financial institution that offers an affordable rate of interest. A high interest rate can drastically increase the amount you pay as EMIs. Paying a higher EMI can negatively affect your monthly income and drain your savings.
>> Multiple Fees and Charges
You need to pay several charges once you avail a home loan for Chartered Accountants. These include processing fees, legal payment charges, valuation fees, and several other associated costs. If any lender levies too many fees on credit, it can significantly increase the total payable amount.
Ideally, you should select a lending organisation that charges the lowest fees to process a credit. You should also check whether the loan fulfils all your financial requirements or not.
>> Applying For a Bigger Loan Amount
Apply for an amount as per your eligibility that can sufficiently fulfil your needs. Availing a larger loan amount unnecessarily will increase payable EMIs and can burden your finances during the repayment tenor.
>> Ensure to Meet The Eligibility Criteria
Make sure you meet the eligibility criteria of the lender before you apply for a home loan for Chartered Accountants. It includes several factors like having a practice for a minimum number of years, credit score, etc. Discrepancies like a low credit score can lead to your application’s rejection.
Fulfil all the requirements before you apply for an advance. If your credit score is low, learn how CAs can increase their CIBIL score and improve it accordingly before applying. It will eliminate any chances of your application’s rejection.
>> Avoid Applying Too Many Times
Applying for too many credits within a short period can negatively impact your credit rating. Financial institutions initiate an enquiry to know your credit rating every time you apply for a professional loan. If the credit bureau receives too many enquiries within a short time frame, they consider you as credit dependent and this decrease your credit score.
Financial experts suggest at least a gap of six months between 2 loans. Lenders are also likely to offer you a higher loan amount if you have a strong credit score and a history of timely repayments of all your previous credits.
Avoid these common mistakes while availing a loan and eliminate any chances of rejection. You are also more likely to manage your personal finances better and meet your short and long-term goals efficiently.