A home loan runs for twenty years. Mistakes made in the first month are paid for across the other two hundred and thirty-nine.
1. Borrowing the maximum you are offered
Eligibility is a ceiling, not a target. At the top of your FOIR you are handing over more than half your income before a single bad month. Most regret starts here.
2. Chasing the headline rate
The advertised rate is for the strongest profile at the lowest loan-to-value. What matters is the spread over the benchmark, in writing, because that is the part that persists after the teaser period.
3. Ignoring processing and legal charges
0.5% processing on ₹60 lakh is ₹30,000, plus valuation, legal and documentation charges. A slightly higher rate with waived fees can be cheaper over three years.
4. Not checking the prepayment terms
Floating-rate home loans to individuals cannot carry a prepayment penalty. Fixed-rate loans can. If a bonus or a balance transfer is remotely likely, that clause decides more than the rate.
5. Stretching the tenure to make the EMI look small
Twenty years to thirty lowers the EMI and roughly doubles the interest. Take the shortest tenure you can genuinely service.
6. Skipping the co-applicant
A working spouse’s income raises eligibility, and both applicants can claim the interest and principal deductions. Adding one later means reassessment.
7. Assuming the sanction covers the purchase
The loan is against the lender’s valuation, not your agreement price, and LTV caps at 75–90% by ticket size. Stamp duty and registration are almost never funded. Budget 20–25% in cash.
8. Not verifying the project’s approvals
An unapproved plan or a project not on the lender’s list stops the file dead, usually after you have paid a token amount.
9. Letting the EMI rise silently
When rates move up, most lenders extend the tenure rather than raise the EMI. It feels painless; you simply pay for longer. Read the amortisation statement after every rate change.
10. Never reviewing the loan again
A loan taken at 9.4% five years ago may be repriceable today, either by internal conversion or a transfer. Check once a year — see when a transfer is worth it.
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