So, have you made up your mind to buy a home? Have you zeroed in all your details of the house and have penned down your entire budget and the payments, which you can pay to get you a dream home? Look at the salient features of the home, which you are going to buy and analyze the surroundings of the home and nearby facilities available like Hospital, School, and conveyance in the form of Public Transport, and distance from railway station, bus stands, and airports. If you are done with this part of the works, then probably all you need is to identify the lender who can lend you the remaining budget to buy a home.
The home buying which generally involves the use of the home loan to buy a dream home has a lot of aspects to look for. Any home loan is a long-term planning and responsibility and thus, one needs to be extra careful while choosing the right home loan, which a person can easily carry for those long years. Making an optimum choice of the home loan and the lender is a must to have a good experience for your home loan and at the same time, living in a home filled with happiness.
Let’s discuss some major factors, which a person should opt for while making the choice of the right home loan Company in India. Here are they:
Based on Turnaround Time
The first and foremost factor to take into the consideration is the turnaround time. Take for an example, you applied for the home loan online and completed the process from your end by filling in the application form and submitting it. But, what happens when the chosen bank’s representatives never turned in regarding your application Form for Home Loan. Isn’t it a sign of careless attitude of the bank? The turnaround time of the bank involves two things, one; how quick they are in contacting the customer and how quick they are in completing the entire Home Loan process. It’s the turnaround time, which indicates their professional approach. And of course, no one would deal with the unprofessional banks for your home loan. Do you?
On an average, the home loan process takes around 5 days to sanction the home loan provided all documents are in proper place. It’s the turnaround time, which indicates a lot about the functioning of the banks and how much care do they offer for the customers. So, any bank and lending agencies, which don’t care about the schedule, let’s avoid it and choose someone, better.
Based on Eligibility Criteria
The banks lay several eligibility criteria for the home Loan Approval. While there are several laid down eligibility criteria for the person to qualify for the home loans, the income is the key. Most of the banks pay higher attention towards the repayment capability of the home loan borrowers and this is what the eligibility criteria stats in most cases. While, other criteria regarding home legality etc are also looked with proper care, thus offering them a confirmation that the loan provided to the applicant doesn’t turn NPA. Thus, the person is advised to approach banks where the eligibility criteria is relaxed, as approaching banks with the tough eligibility criteria may result in the decline of the home loan application and you need to apply for the home loan with another lender, thus wasting your precious time and may also result in the loss of the chosen property.
Based on Documentation Required
The less is the documentation required by the bank offering you the Home Loan, the better it is for you. Unlike other loans, the home loans call for the huge number of documentation like income proof of the applicant and many documents related to the applicant, and also title deeds of the property along with several other important documents in regard to the property.
If the documentation is involved, most of the banks require a similar set of documents required for the sanctioning the home loans, but still, there are some banks, whose home loan approval process is little tougher than others like with the case of the SBI. It would be better for you to deal with the lending agency which has an ease of the loan application approval process. However, the decision to opt for the lending agency must not be done based on this sole factor, as there are several factors, which we have discussed above and may to follow below.
Based on Home Loan Amount
How much is the home loan amount, a lending agency is ready to offer you? Is it suffice or are you still in need of more loan amount? As per the RBI Guideline, it’s the LTV Ratio, which is the crucial player in the decision of the sanctioning of the home loan amount, besides your repayment capability and other factors. LTV or the loan to value is the ratio, which is up to 90% for the home loans of 30 lakhs or less. While the more is the home loan value, the less is the LTV Ratio.
In fact, it’s the loan amount, which decides how much you need to pay as a down payment. The less is the loan amount, the more will be the down payment; you need to shell out from your pocket and vice versa. Thus, it would be better to opt for the lending agency, which can offer you a bigger loan amount. However, while making this choice, remember that the more is the loan amount, the more is the EMI responsibility.
Based on Rate of Interest
Here comes the important factor, which most of the people always look for, the rate of interest on home loans. The rate of interest is the deciding factor, in how much the total loan amount you will be paying in return. It’s the deciding factor, which evaluates your EMIs per month and it’s the first and foremost important factor, which every home loan seeker, pay attention at, whenever he/she visit the lending agency’s website. TO make a choice of the right home loan company in India, make a list of some top lending agencies, which offer the lowest rate of interest on their home loan product. The less is the home loan rate of interest, the less costly will be your home loan. Since the home loan is a long-term responsibility, any minor difference in the rate of interest can impact a lot at your home loan, thus, look for the cheapest rate of interest offering lending agency, however taking a note of other factors for sure!
Based on Home Loan Tenure
Most of the banks offer a home loan up to 20 years and some are there whose offering is up to 25 years. While, the home loan tenure is an also a deciding factor in how much you are going to pay at your home loan, and also how much your EMIs will be per month, the choice of the right home loan company, having the flexible home loan tenure option will be a better idea. Most of the people, have been seen as taking a home loan for a period of 20 years, while some opting for 15 years, choosing the lender with a wide spectrum of home loan tenure can allow you in making the choice as per your convenience.
Based on Processing Charges
The processing charge is the fee the banks charge in processing the loans. This processing charge can range anywhere from 0.25% to 2%. Since this total processing charge is calculated as per the loan amount sanctioned; even a slight change in the processing charge can result in a major impact on the money, which you need to shell out from your pocket.
Consider a scenario, where on a home loan amount of 50 lacs, Bank A charges 1%, while the bank B charges 1.5%. The total amount to be paid as the processing charge in case of Bank A will be INR 50K, while in case of the Bank B will be INR 75K; the difference of 25k which cannot be ignored at all. Thus making a choice of the bank based on a processing charge will never be a bad idea.
Based on Prepayment Charges
How acknowledged are you in terms of the prepayment and foreclosure? If you aren’t, collect the complete information about these two terms, as they are the deciding factors in how comfortable are you at your home loan. Prepayment is the process of paying the early payment on your home loan responsibility, while the foreclosure is just a synonym of the prepayment; it allows the people in closing the home loan much before the home loan tenure actually ends.
While most of the banks are seen as charging a certain percentage like 1% or 2% on the remaining dues as the prepayment penalty, there are some other restrictions varying from banks to banks over the freedom of prepayment. Many banks don’t allow prepayment until a certain period of the home loan, while some are there who charges an additional fee as a prepayment penalty. While, the RBI has ordered not to levy any charge on the prepayment or foreclosure on home loans, bearing floating rate of interest, the ones who still are running with the fixed rate of interest have to bear the prepayment charges, if they decide to prepay the home loan.
Thus, make a choice of the right home loan company, which offers the flexibility of prepayment or foreclosure, as it’s a long-term responsibility, and who knows, you may want to close your entire home loan after 5 years!
Based on Responsiveness to change the rate of interest
How responsiveness is the banks with the announcement of the change in the rate of interest at home loan. Judging your lender based on their responsiveness to change the rate of interest and by what margin following the RBI change in policy, allows you in making a better choice for your home loan.
For example, if the lender is too responsive to bring down the rate of interest based on the announcement of RBI, the Lender is worth considering. There are several lenders who have been seen as increasing the rate of interest with a hurry, but when it comes to the decreasing the rate of interest, it takes ages for them to do so. Thus, choosing the lender which offers you the instant action of the increase or decrease in the rate of interest will be a better candidate for your home loan.
Based on your Goodwill
There may be some banks that are well known to you and with whom you enjoy a long-term relationship. Several representatives of those banks, are known to you and you enjoy being there as a customer. Making a choice of those banks, allows you to have a better deal as you are the esteemed customer of their bank, and the chances are that you might end up getting a better deal for your home loan as compared to various other customers. Thus, based on your goodwill, you can make a choice of the bank which can offer you a much better home loan deal.
The choice of the right home loan company in India is the highly important task and is as equally and important as choosing the right property. The home loan is a long-term commitment and any failure in choosing the right lender can affect your home loan deal, which may prove to be disastrous for you in the long term. The home loan calls for the responsibility of around 20 years and thus dedicating enough time and research work over the choice of the most suitable lender in the market will be the best step you should opt for while choosing the right lender for your home loan.
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