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Home Loan: A Burden for Middle-Class Family

Home loans mainly require long term commitment from the customer and a large amount of money as interest. Since Home loans can go on for a decade or two, extracting a large chunk of money from your pocket, it can be a significant burden over your family and you. Home loans offer in the market try to make them as comfortable and attractive for the customer to attract them. But paying a hefty amount monthly for a long time can be tiresome. Therefore, one must carefully think and get Home loans as it requires one to pay out of his pocket for many years regularly.

Home loans can or cannot be a burden; it mainly depends on the total amount you have taken as a loan and the duration for which you have to pay. Also, you need to have a regular income to pay the EMI. To pick the perfect Home loans to offer for yourself, one needs to research the available schemes in the market adequately. Once multiple loan schemes have been selected, choose one which provides you the maximum loan over the best interest rates. Also, make sure that it allows for enough time for you to repay the loan.

Let’s have a look at a few things which you should notice before selecting an appropriate loan for yourself.

  • Maximum Loan amount: Make sure to choose the Home loans to provide a maximum loan amount for you. The more the amount, the more chances of you spending your savings on the down payment.
  • Interest rate: the Interest rate is the main component of Home loans. Make sure that you are offered the minimum interest rate for your Home loans. Higher Home loans increase the pressure and burden over the customer
  • Terms and Conditions: When a customer gets Home loans, they always avoid going through the main terms and conditions of the policy, which can increase the stress of the customer to pay the EMI’s. The individual should make sure that all the terms and conditions are transparent and understood correctly before approval of the loan.

Apart from these things, an individual has to make sure that he takes as much debt as one can manage without compromising on the basic needs of him and family. The more the debt, the more saving one has to spend. If the savings are spent faster than they are saved, then it can again create a lot of burden over the individual. It is a monthly cash expense which will continue for years but so will the disposable income of an individual which is meant to increase over the years.

Let’s have a look at some of the disadvantages one has to face while opting for a Home loans

  • Long Duration: When a person chooses for Home loans for a decade or more, he is always worried about paying the EMI’s every month without any delay. However, if one is not able to pay the EMI’s due to a situation where one loses his job then due to a default, the bank can take ownership of the house. Such a long term Loan can make things uncertain for an individual.
  • Decreasing the value of home: This can be a reason of burden for some. In this case, when a person buys a home with Home loans, the price is higher. However, with time, the value of the house can decrease due to many factors. In this case, the person has to pay more than the actual house value in loans.
  • Loss of investment amount: Paying a considerable sum of money in monthly EMI will also decrease the value of your investment for the future. Since you are paying for the Home loans for a long time, it will affect your long term investments as well, which can be a problem for your family. It is suggested to take Home loans only when you can manage your savings and finance along with it. The average duration of a Home loans can be least ten years, and within those ten years, a person may be planning to buy a car or planning for the education for kids, or many other things. Since it takes up the money of your future needs and covers your debt, it creates more pressure and burden over the person.

There are many other things that one needs to take care of while opting for home insurance. If one is not cautious and does not check the details of the Home loans before choosing one, it can create a lot of problems to future saving. Home loans are not a small amount like a car loan or personal loan. It can take a toll on your budget if it is not planned correctly. Financial planning could play a significant role in creating fewer burdens while getting Home loans.

Home loans in the market might be presented to you as a fair offer to own your house and live in it. But in reality, it does not show you the burden you have to carry on for a decade or two over your shoulder. Future expenses cannot be predicted, like medical emergency and other essential costs. Higher EMI’s can also create a problem in this, as you will not be able to fulfill the unexpected expenses. Therefore, make sure that you have thought over all the aspects before going for Home loans.

Do not plan it if you are not sure about paying it for a more extended period. Uncertainty can create a lot of confusion and can lead to problems after you have taken the loan. Loans might not be wrong or a problem on its own, but if not appropriately planned as per your current finances and incomes, it will increase your debt to a level where it will take over your income and savings.

 

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