While seeking a home loan, some queries may seem fairly straightforward but it is always good to start with the basics and then get into the details. Here are some things you should consider while selecting a home loan lender.
1. Can you trust your lender?
Just like you would carefully choose your friends, by understanding their behaviour, habits, family background, etc., the reputation of your lender is very important to your cause. As It is a long-term association, do look for details like how long have they been in the business, are they known for being ethical and professional and what is the typical clientele they service? Answers to these questions will help you shortlist your loan provider faster.
2. What is your loan eligibility?
A thumb rule to remember is that traditional banks would have stricter eligibility criteria while housing finance companies (HFCs) / non-banking finance companies (NBFCs) will be slightly more flexible. A bank will just look at your income proofs and come up with an eligibility, while others might gather detailed information about your living conditions, side income, upcoming expenses, etc., to understand your repayment capacity. Needless to say, a more thorough assessment is likely to favour you with a better loan eligibility and a higher loan-to-value ratio (LTV ratio). You can surf the internet and check your loan eligibility for free. This will also give you a fair idea before formally applying.
3. What is the interest rate?
Although a lesser interest rate is preferred, you should know your actual interest outflow at the end of your loan tenure. Also, check whether the offered interest rate is floating or fixed. Usually, a diminishing floating rate would work in your favour.
4. Can you easily make prepayments?
The ultimate truth of any loan – the longer the tenure, the higher the interest paid! No matter what interest rate you have been offered, if you end up paying it for a very long time, chances are the interest outflow will be very high. The smartest way to save money is to close your loans early, either through small but regular prepayments or with a lump sum amount as prepayment. Ensure that you have the option of prepayment for your home loan at the time of taking the loan.
5. Are they transparent about their charges and fees structure?
You should have this in writing – all the types of fees and charges that will be levied on you throughout the loan tenure, such as processing fees, legal and technical fees, mortgage charges, foreclosure charges, etc. You should definitely ask about these before going for a loan and get maximum clarity.
See also: Home loan interest rates and EMI in top 15 banks
6. Are you getting digital access?
Most companies are shifting towards a digital platform for the convenience of their customers. You should be able to apply for the home loan smoothly and then, check about the loan from a mobile app. Functions like paying your EMIs, getting a statement of account or raising a query from the app should be a must have!
7. Is the process hassle-free?
Formalities and documentation involved in a loan process are pretty much standard across all lenders in the industry. However, the sanction time can often vary by months. Usually the so-called ‘simple documentation’ is not that simple! Choose a lender who prides themselves on the speed of their processes. Ask for all requirements in one go and then start building your set of paperwork or you can go for an organisation who trusts you more than the documents that you have.
8. Can you get a single point of contact?
Your lender should be able to cater to all your needs and from a single point of contact, so that you do not have to run around.
9. Are your mortgaged documents safe?
Your mortgaged documents are your claim to your home. Ask your lenders about the precautions they follow with the documents, so that paperwork does not become a headache after you finish the loan tenure.
10. Are you taking home loan insurance?
Last but not the least, safeguard your family from any unprecedented situation. An insurance to cover your home loan is a secure route to your dreams even if you are not there to witness it. So, it is always advisable that you take insurance and secure your outstanding liability and ensure a safe future and a roof over the head of your family.
source: housing
