New Delhi, Gaurav Mohta. Festive season is going on. A large number of people want to buy a new home. If you are also among such people, then along with choosing a good house, you should also choose the right lender carefully. I will try to explain these things in a simple way for you to understand properly. Some of the things given below are obvious to us but it is always good to start with the basic aspects and discuss them in detail later.
1. Can you trust your lender company?
Just as you choose your friends based on behavior, habits and family background, the reputation of your lender company is most important to you. It is a long term relationship. So take a look at these details. For how many days has he been in business? Has he been ethical and professional. What kind of clients do they serve? Answering these questions helps us in quick selection of the lender company.
2. What is your loan eligibility?
General rules- Traditional banks have stringent eligibility conditions. At the same time, the eligibility conditions for Housing Finance Companies (HFCs) and Non-Banking Finance Companies (NBFCs) are slightly softer. Some banks only look at your income documents, on the other hand some banks also collect details related to your standard of living, income from other sources, possible expenses etc. This helps them understand your ability to pay.
Needless to mention here that if you scrutinize something very thoroughly, it can lead to better loan eligibility and higher LTV. You can check your loan eligibility through the internet for free. This will give you a better idea about the eligibility before applying for the loan.
3. What is the rate of interest?
It is quite easy to get this information. The interest rate is like the election manifesto of any lender company. Actually, it does not show the complete picture. You can go for lower interest rate but you should be aware of the total interest payable after the tenure of the loan. Also check whether the bank is offering the loan on floating interest rate or fixed rate. Generally, reducing floating interest rate proves to be better for you.
4. Can you pre-pay easily?
One thing that is always true about any loan is that the longer you take the loan, the more interest you will have to pay. If you pay off the loan for a very long time, the chances are high that you will have to pay very high interest. The smart way to save money is to close the loan early. You can do this by making regular small prepayments or by paying a lump sum. At the time of taking the loan, one should ensure that the facility of pre-payment of the home loan is available. Most of the banks do not encourage pre-payments as it causes them losses.
5. Are their fees and fee structure transparent?
You should have in writing the details of the fees to be charged for the entire loan tenure. These will include processing fees, legal and technical fees, mortgage fees, foreclosure charges, etc. You must definitely ask these things to get maximum clarity before taking a loan.
6. Are you getting digital access?
Most of the companies are shifting to digital platforms for the convenience of their customers. It has become the basic mode of offering in today’s time. The process of applying for a home loan should be simple. Along with this, there should also be a facility to check loan status on the mobile app. Must have facilities like making EMI payments, receiving account statements or raising queries through the app.
7. Is the process easy?
The formalities and documentation related to the loan process are similar for almost all the lenders in the industry. However, the time taken for loan approval can vary. The term generally promoted as ‘easy documentation’ is not really that simple. Choose a lender who describes the fast process as their strength. You must complete all the requirements together and then go for the paperwork or choose a lender who trusts you more than your documents.
8. Can all your work be done with one contact?
Your lender should be able to meet all your requirements and provide you with a single point of contact. With this, you will not have to run around much and you can talk to that person for any information or formality.
9. Are the documents mortgaged by you safe?
Your mortgaged documents confirm your claim on your house. Its security should be very strong. You should ask your lenders what precautions they take with the documents so that the paperwork does not become a headache for you after the loan tenure is over. Ideally, this should be a safety vault that is suitable for all weather conditions.
10. Are you taking home loan insurance?
This question may be the last but it is very important. It is very important to keep your family safe from any unforeseen circumstances. In such a situation, it is always advisable to take an insurance for your outstanding liabilities. This secures the future of your family and maintains a roof over your family. Now the necessary list is ready for you. Keep this article safe. This will make your home buying journey easier.
(The author is Chief Marketing Officer, Home First Finance Company. Published views are personal to the author.)