Vineeta, a Pune based engineer, decided to apply for a home loan, to fulfil her long-cherished dream of owning a house. Tired of knocking the doors of several financiers, she chose a lender having convincing salespersons, without really conducting any prior research. Consequently, she had to deal with several ordeals while repaying her debt, including scores of hidden charges, inflexible loan options and heavy penalties.
Consumers search for the most reputable home loan providers and often end up getting trapped by smooth talking salespersons. It is, therefore important to do your homework and take into consideration every factor before opting for a particular lender.
Factors to Consider
Credibility of the lender:
A reliable lender would offer the needed flexibility when it comes to terms and conditions of the loan. Apart from that, a reliable bank would provide superior customer service and would be willing to go down that extra mile for keeping their customers satisfied.
Those who are contemplating a property purchase with the help of a housing loan, must check the reputation of a lender and then make a decision, to ensure that they get a good deal throughout the loan tenure.
Rate of interest:
Although you should consider different interest rates and settle for the best, however the lowest possible rate may not always be the best option. Study all the terms and conditions along with reputation of lender. Banks tend to levy various other charges on home loans, in the form of processing fee, technical assessment and documentation fee.
One needs to rightly choose between the type of interest rates – Floating or Fixed. Choice of type of interest rate should be taken basis market conditions i.e. if the rates are expected to go up or down and loan amount being opted for.
Tenure Flexibility:
One must also consider tenure flexibility and go for a loan having an agreeable repayment tenure. Be sure to consider the tenure range a bank offers, and whether that fits your needs.
Loan Amount and Eligibility:
Internal lending criteria vary from one bank to another and it is on the basis of these that a particular amount of home loan is approved for the borrower. The criteria might cover the borrower’s age, job profile, employment stability, credit history, among other aspects.
Processing and disbursal speed:
Always choose a bank that takes less time to process and disburse a home loan.
Repayment terms:
There are certain terms and conditions pertaining to repayment of the home loan imposed by banks on customers. Potential borrowers must clarify the terms related to settlement/foreclosing the outstanding amount, transferring the balance to another lender’s account, prepaying a part or full amount of the home loan, and other things, before finalizing a lender.
Hidden charges:
Hidden charges is something that tends to prick the pocket of borrowers the most. Thus, while narrowing down the options, it is advisable to compare the processing fee, down payment, valuation fees, prepayment costs and other charges levied by different lenders.
It is advisable that borrowers research and compare several competitive features of home loans offered by different lenders. It is better to have the policies, facts, terms and conditions clarified well in advance before locking in a seemingly ideal home loan with any lender.
Considering every possible, decision-affecting factor, planning out everything and following it systematically is the key to a smooth, hassle-free journey to owning your dream abode.
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