Home loans: Think beyond interest rates

Posted by Robbin K on September 24th, 2016

Home loans: Think beyond interest rates

With banks and financial institutes announcing a slew of facilities, availing home loan has become an easier process. But the task of choosing a home loan lender isn’t as simple. What are the most important points an aspirant buyer should never lose sight of when it comes to housing finance?

Owning a home is an aspiration that pushes many. After calculating the needs and figuring out the wants, the next step for any home buyer is surveying for a housing finance. It is important that the buyer factors in several key aspects and not just rate of interest. After all housing loans are long-term commitments and relationships.

So what is it that a consumer needs to evaluate in addition to the troika - interest rates, tenure and fees?

Brand value – because vintage bring experience

A home aspirant starts scouting for home loan by doing the rounds of banks and non-banking financial companies (NBFC). At this point it is prudent to look beyond just what appears to be good deal. It is important to choose an institution with a good brand and vintage.

Institutes with a sizable body of experience have earned consumer trust and confidence. Their records are available in the public domain for verification. Instead of gimmicks, they offer tailored solutions to suit.

Fixed or floating – Liberty to choose any

Touted as the interest scheme that provides complete peace of mind, fixed rate offers protection from macro-economic volatilities to the loan customers. If you wish to play it safe and security being your foremost concern, consumers may opt for fixed rate option.

On the other hand, most floating rates, though generally cheaper at entry level, are prone to change many times during the loan tenure. But if interest rates remain static or are on a downward trend, then consumer could save money in a floating rate loan. One should look at the overall rate movement scenario in last few years to decide upon the lender.

Offers to keep an eye on – Loan Enhancements, Tenure and Repayment

Gimmicks aside, there are certain offers that house financing consumer should look out for like loan enhancement, and extended home loan tenure.

In case of escalation of costs, lender should offer options like loan enhancement on the same property to help sail through tough times. Same goes for extended home loan tenure. An institute of repute should have an option to extended tenure to 30 years. It would reduce monthly EMIs and definitely lighten overall burden.

A home loan is about freedom, not limits. Consumers should insist on a repayment clause that let them repay as many times as they want.

Hallmark of an institute – Need based customization

Consumer should make sure that the bank or institution is flexible enough in working out maximum loan eligibility, and offer customized EMI options, choice to switch over from Fixed Rate to Floating Rate and vice versa.

Customer convenience to the Fore

Often it is the working professionals that are shopping for home loans. They are enticed by freebies but what they need from a lending institution are convenience features like instant online loan approvals, home loan repayment calculator doorstep services, dedicated relationship managers and excellent post disbursement services via online customer portal. Only an institute or bank of repute can offer them this. It’s vital that consumer lays emphasis on such critical factors before signing on a loan agreement

Reach – PAN India Network

Although it isn’t yet, but pan India branch network should be a deal breaker when looking for a home loan. Consumers should be able to enjoy same levels of service, wherever they are. 

[Source: http://www.business-standard.com/content/specials/home-loans-think-beyond-interest-rates-116092101022_1.html]