First-time home buyers often make costly loan mistakes that increase EMIs and overall repayment burden, according to Mint reports. Atul Monga, CEO & Co-Founder of BASIC Home Loan, explains that buyers typically focus on securing maximum loan amounts at lowest possible EMI, but both approaches can increase overall repayment burden. Common mistakes include opting for excessively long tenure, making very low down payments, ignoring hidden costs, overlooking credit score impact on interest rates, and borrowing at the edge of affordability. As reported by Mint, many borrowers focus only on immediate requirements and overlook important factors that affect the overall cost of borrowing, with the right choice depending on financial goals, repayment capacity and long-term plans.
Choosing an excessively long loan tenure reduces monthly EMI but increases total interest paid over the loan lifecycle, making the property significantly more expensive. On a ₹60 lakh loan, extending tenure from 20 years to 30 years may reduce EMI but increase total interest outgo by several lakhs. Monga emphasizes that buyers should evaluate total cost of borrowing and ensure EMI remains comfortable even if interest rates rise in the future. Interest rates are an important factor when selecting a loan, but they should not be the only deciding factor, as a loan with slightly lower interest rate may not always be the most beneficial option if it comes with limited flexibility or higher associated charges.
Making a smaller upfront contribution increases loan amount, resulting in higher interest payments and greater repayment obligations. Expenses such as registration charges, processing fees, insurance, maintenance and other property-related costs can disturb monthly financial planning. Buyers should aim for healthy down payments to reduce loan burden and improve financial flexibility while accounting for all additional expenses. Understanding the complete loan structure provides a clearer picture of the financial commitment involved, with borrowers advised to evaluate the complete cost of borrowing including processing fees, documentation charges, repayment terms, and other applicable costs.
A weaker credit score may lead to higher interest rates, increasing EMI and overall repayment amount. Borrowing at the maximum eligible loan amount can leave little room for emergencies or unexpected expenses. Monga advises choosing loan amounts that remain comfortable during financial uncertainties, noting that the best borrowing decision balances dream home with long-term economic health. For self-employed individuals and business owners, the assessment process may involve closer evaluation of business performance, cash flow, profitability, and financial records, as commercial loans are often connected with business activities and lenders carefully analyze whether the borrower has sufficient and stable income to manage repayments.
