You have zeroed down which flat or house to buy. The next step after that is identifying the lender who will give you the loan, which is according to your needs. Choosing a home loan can be difficult in today’s time due to the presence of so many lenders available in the market. The key to decide your lender is that you should consider the following points, Eligibility criteria, interest rate, processing fee and other factors. Keep these points in mind while choosing the best loan scheme.
Maximum amount which can be borrowed
Most loan specialists require 10-20 percent of the home’s price tag as an initial installment from you. It is additionally called ‘one’s own commitment’ by certain moneylenders. The rest, which is 80-90 percent of the property estimation, is financed by the moneylender. The complete financed sum additionally incorporates enlistment, move and stamp obligation charges. Despite the fact that the moneylender ascertains a higher qualified sum, it isn’t important to obtain that sum. To keep the loan amount minimal, it is advisable to pay at least 20-30 percent as a down payment.
- Interest Rate
Interest rate is one of the most important factors that needs to be decided carefully as it determines whether you can pay the loan easily. Different banks provide different interest rates, there are two types of interest rate, floating and fixed. In floating interest rate, the rate keeps on changing throughout the tenor depending on the market condition. However, in fixed interest rate, the rate remains the same throughout the tenor.
- Eligibility Criteria
All financial institutions have different eligibility criteria for evaluating the eligibility of applicants. The common parameters on which every bank or financial institution judges are employment stability, borrower’s age, income source (preferably salaried, because of easily understandable salary slips and ITRs) and credit history.
- Credit Score
A good credit score is a key to get a best home loan offer. A credit score is a number between 300–850 that depicts a consumer’s creditworthiness. The higher the score, the better a borrower looks to potential lenders. A credit score is based on credit history: number of open accounts, total levels of debt, and repayment history, and other factors. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner. Credit score can be measured online, if your score is low that you can measure to improve your score.
- Fees & Charges
Always go with a lender who is transparent with you from day one. Ask about the hidden charges, which most of the lenders don’t reveal to the borrowers. Also before finalising the lender, compare processing fees, down payment, prepayment costs, valuation fees and more. The processing fee is the charge banks deduct for processing the loan. This can be anywhere between 0.25%-2% of the loan amount.
- Terms & Conditions
It is important to clarify all the terms and conditions beforehand as it may affect your loan sanction, disbursal, or repayment process. Go through the documents of terms and conditions very carefully. Clarify the terms related to foreclosing the outstanding amount, prepayment of the loan, full amount or partially, transferring the balance to another lender’s account, before finalizing a lender.
- Turnaround Time
The disbursal time varies from lender to lender. Generally, the disbursal time is around five if all the documents are submitted and are in order. There are services which are to be done even after loan disbursal, so choose a lender depending on several factors and not only one. Choose a lender who has a strong system and provides amazing after services.
- Services Provided by Lender
A lender should also provide services like tax certificates, provisional amortization, part-closure services and reduction in the tenor/EMI after partially paying the loan amount. It is mandatory to check for all these services as well.
Most of the lenders require the same documents, but actual requirements may vary. The common documents which are required are proof of age, address and income.
After doing a thorough market research, select the scheme which suits your need. Your decision should not be based only on one point but you should consider several points to get the best offer and that way you will also not be trapped into a scam.