Tuesday, 16 February 2016

Guide To Choose the Relevant Home Loan Lender

Buying a home is a most sought after dream. Everyone wants a place of their own. Remember the time when we were children, how we would like to spend a night in a makeshift tent in our home or may be set up a small toy kitchen under the table and ask our mom & dad to come over for tea? Well, you could say that the seeds of owning a dream home were sowed early. It would not be an exaggeration to say that today you cannot buy a home without taking financial aid.
Best home loans in India are provided by banks and non banking financial institutions to prospective buyers and home-owners. Here is what you can do to compare and see which lender you should pick:
  1. A safe and secure background: A home lender would ask for some of your original documents and keep those documents with itself uptill the tenure of the loan ends. Therefore it is imperative for the borrower to know how safe would your original documents be with the lender. A check on its background would be sufficient to know about this. You must also try to find out how happy your lender’s customers are. This information can be sought online and it will help you evaluate how customer friendly is the lending institution.

  1. Interest Rate: Lenders offer two types of rates – floating and fixed. A fixed rate remains fixed for the entire loan period and provides a sense of security against rising interest rates. Whereas a floating rate is a fluctuating rate that depends on market conditions and macroeconomic factors like inflation. It is advisable that a homeowner should select the rate carefully after analyzing the pros and cons of each type of rate. Your lender must offer you a rate that is linked to the base rate.

  1. Fees and Charges: There are certain fees that the borrower has to bear like processing fees which are taken towards administration of the loan application. Other than this, lenders do levy charges for prepayment of loan, that is paying the loan before the tenure ends and also on part payment of loan, that is paying an amount more than the EMI. There can, perhaps, also be a lock in period during which you are not allowed to preclose your loan account. Then there is also a late payment penalty that may be charged incase you are not able to pay your monthly instalment on time. A creditor with lower fees and charges may be favoured.

  1. EMI and its subsequent impact on your monthly income: Since EMI for same rate of interest across lenders will be same, it is yet vital to note the impact on your monthly budget post –EMI. For example, you may have narrowed down on two lenders. One is offering a rate of 9.55% while the other is asking for 9.68%. Both rates are floating rates.  For a loan amount of Rs. 50 lakhs, the difference in EMI could be more than 5, 000. You can make use of online home loan EMI calculator to aid your decision making.

  1. Time taken to disburse the loan: Customers are mostly thwarted if they are subject to tedious procedures and too much documentation. Also, how much time a lender takes to evaluate your application and revert to you is another important consideration. For example, while some banks may claim to approve your loan same day of your application, others may take almost a month to do the same.

  1. Number of branches: Incase you are in a job because of which you are constantly moving across cities, then having a lender on your side that has a widespread number of branches will be beneficial. Incase you would like to prepay your loan, pay your monthly EMI or need any information regarding your running loan then locating the nearest branch would be easy.

  1. Services offered: Banks and Non banking financial institutions alongwith home loan also offer certain additional benefits like door step services, top-up loans, e-approval, balance transfer of existing loan etc.

There is so much joy attached to buying your home. You certainly do not want to mess it up because you did not make an in-depth analysis of your lender. Let your joys be doubled by partnering with the right home lender. Our final word of caution, one must read the fine print carefully before investing in any financial product. It is important to understand all the terms and conditions and clauses laid down in your loan.

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