Applying for a Home Loan? Avoiding Home Loan Frauds

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A home loan can provide significant financial assistance to an individual who is short on funds to buy his/her dream house. With the emergence of digitalization, getting a housing loan has become much more manageable. As a result, the number of people applying for a housing loan has increased a lot in the last few years. However, this made fraudsters move their attention to home loans and other loan schemes. If you get entangled with a fraudulent housing loan, you can lose a lot of money, which can ruin your life. Fortunately, there are multiple ways to identify these swindlers. In this article, you will learn how to avoid housing loan fraud with a few simple tricks. Let’s dive in.

What is a Home Loan Fraud?

A home loan is a fund borrowed from a lender (banks or financial institutions), which is used for buying or building a house. You can also apply for a home loan if you want to renovate your home or reconstruct a portion of it. Usually, this type of loan is granted by banks and non-banking financial institutions.

Home loan fraud, on the other hand, is a deceitful lending tactic that targets borrowers who are looking to secure a housing loan. This kind of fraud can be orchestrated by the individuals who aim to capture your residence. These frauds can also be a group of people who scam others using perpetual appraisal fraud or through rental properties.

Beware of Home Loan Fraud

These kinds of housing loan frauds are not really new in India. It has been going on for years. You can always find news about swindlers who scam people using different fraudulent loan schemes, most of which are instant home loans and personal loans. There are also many scammers who cheat people by pretending to help them in securing a housing loan.

Just in the past few years, the number of housing loan scams has crossed hundreds of thousands in India. The fraudsters often impersonate banks and bank representatives to dupe people into paying a hefty sum upfront to secure low-interest home loans, which they actually never get.

Here are a few common characteristics of a fraudulent home loan deal:

●   The interest rates of fraudulent home loans are often unrealistically low compared to the official rates published by the banks.

●   The organization sanctions the loan without asking for proper proof of income.

●   You get the loan with a condition to choose from a few options. These options almost always turn out to be illegal properties.

●   They assure you that you will get a low-interest home loan, even with a credit score of 600 or lower.

A Few Tips to Avoid Home Loan Frauds

A housing loan fraud, just like any other scam, can strike you at any moment. In fact, according to a study, nearly 42% of all Indians have experienced financial scams, which also include housing loan fraud.

Of course, these scams are a significant threat to our financial well-being. However, with the correct information, you can avoid getting scammed by these swindlers. Here are a few tips that can help you avoid home loan fraud.

Research the Lenders Carefully

Before you take a housing loan offer, you must research the lenders carefully. Check the website and the email address of the lender. When you are inspecting the website, check whether the website is RBI-approved. Look for third-party testimonials from trusted sources and talk to your friends and families who have done business with them. This way, you can find the best home loan lenders while avoiding potential scammers.

Never Pay Upfront Fees

No reputable lender will ask for an upfront fee before you receive the loan amount in your bank account. If your potential lender is asking you to pay a hefty sum as the upfront fees, it’s a dead giveaway that proves that they are scammers. Never fall for these obvious home loan scams.

Read Every Single Detail Carefully

Sometimes, the cheapest home loan schemes can ruin your whole life if you don’t read the terms and conditions of the loan carefully. That’s why you must always ask for a document that includes the charges and the conditions of the whole housing loan deal. You must also make sure that the charges and the conditions mentioned in the contract are the same as the potential lenders promised you.

By not reading every single detail carefully, you give swindlers the leeway to scam you. This way, they can charge higher fees, which they never mentioned during the discussion. They can deduct TDS without working. Or even worse, they can harass and threaten you and your loved ones to collect an unreasonable amount of money. So, always read the terms and charges of the loan carefully.

Beware of the Impersonators

The technology of our world has advanced rapidly in the last decade, which improved the quality of our lives. We can even get our government IDs online and register new businesses digitally with a few simple clicks. However, this also gave the scammers a powerful tool as it has become increasingly simpler to create fake IDs to dupe people.

The fraudsters often impersonate genuine financial institutions and swindle people with their well-planned housing loan scams. To avoid such impersonators, contact real companies and banks before you apply for a housing loan.

Conclusion

Millions of financial frauds and other criminal activities related to loan schemes are negatively affecting the overall economy of India. With the demand for housing loans increasing with every single passing year, scammers are employing various deceitful tactics to swindle more and more people into buying fraudulent mortgages. Fortunately, by understanding how housing loan frauds work, you can successfully avoid these loan frauds. Learn what housing loan fraud is and research the signs of potential loan fraud. Do proper research before applying for a home loan, and read the loan agreement carefully. This way, you can avoid the swindlers and secure a genuine housing loan.

 

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