How to pick the Best Home Loan scheme in Your City
When you are looking to buy a dream home, one of the most difficult decisions for you is to choose a right lender to avail a home loan from. There are various banks and financial institutions ready to accept your loan application and grant you loan but that does not mean you are getting the best deal available. Any home loan typically locks you for 15-20 years or may be more. So, it is vital to make sure that you do thorough research before finalising the best mortgage lender that meets your needs and offers you the best home loan scheme available in your city.
Today, as there are several home loan options available for an individual looking to buy a home, it is difficult to stand out the best of them all. As a home loan borrower, you will witness various banks and financial institutions ready to sanction you a home loan with good deals and at a bargain. But who should you choose? You should compare the home loan from several lenders to avail the best home loan scheme in your city. But for that, you should keep in mind 10 most important things to ensure that you get the best home loan offer in your city.
- Interest Rate: Home loan interest rate is one of the most important factors in deciding the best home loan available. But do not blindly go for the cheapest interest rate available in the market. Compare different lenders and find a competitive rate and consider other aspects and charges of the loan as well.
- Compare Lenders: Before deciding a lender for your home loan, it is always advisable to make a comparison between at least 5 to 6 lenders. And as mentioned above, do not make the interest rate as the standalone criteria for the best home loan scheme in your city. You should compare MCLR, the margin offered, maximum tenure offered, prepayment charges, foreclosure charges and eligibility criteria. Also, you should check whether the lender has funded a property similar to yours or not.
- Turnaround Time: Check the processing and disbursal speed of all the lenders. You may think it does not hold importance, but in the long run a lender who takes less time in processing and disbursal of home loan is beneficial. Normally, it takes 10-15 working days for a bank or financial institution to process a home loan application and takes 3-5 days in addition for disbursal of the home loan. But, it varies from one lender to another.
- Check Home Loan Criteria: Every bank or financial institution follows lending criteria which they consider before they sanction home loan to various borrowers. The criterion varies from one lender to another but mainly includes details like the borrower’s age, job profile (preferably salaried, because of easily understandable salary slips and ITRs), employment stability and credit history.
- Floating Interest Rate over Fixed Rate: Choose a floating rate of interest over fixed interest rate, even if the latter comes with an attractive rate offer. If you opt for a fixed rate of interest then you will be required to pay a penalty in case of foreclosure. Whereas, the floating rate of interest varies from time to time and can help you save money on interest and other expenses. So, it becomes important to check for the best home loan interest rate in India.
- Fees & Charges: Most of the banks and financial institutions have some hidden charges which are not disclosed to their borrowers. So, it is highly recommended to look for hidden charges and compare the processing fee, down payment, prepayment costs, valuation fees and other charges before finalising your home loan lender.
- Read Terms & Conditions carefully: There are several terms and conditions listed on the repayment of your home loan. You must thoroughly read all the terms and conditions related to your home loan before deciding a lender.
- Services Provided by Lender: Home loan is a long term obligation to fulfil. Availing a home loan gets you into a long term relationship with the lender, which makes it mandatory for you to check the services provided by the lender carefully. Do not finalise the very first lender you meet or the one providing the lowest rate of interest. With low rate of interest also check if the lender is providing services like tax certificates, provisional amortisation, part closure services and reduction in the tenure / EMI after partial repayment.
- Credit Score: People with a low credit score or less credit history may find it difficult to get a home loan sanctioned. A good credit score tells your lender that you are a responsible candidate as a borrower and can repay your home loan. You can get your credit score by checking your credit report online so that you are aware how your credit profile looks like. If you know your credit score, you can take adequate measures to try and improve your credit score. Having a low credit score could lead to rejection of your home loan application or if it is accepted, it may come with a higher rate of interest.
- Visit your Bank: After discussing about home loan with some of the lenders, you can even pay a visit to the bank with whom you have prior relations with. If you have a savings account with a bank or have availed a loan from a bank in the past, you can visit them to check for the best offer available in the market. There are chances that a bank with which you have prior relations might provide you a home loan at a better interest rate than available in the market. But, it is of utmost importance to compare the offer with other lenders available in the market as well.