“All that glitters is not gold” is a well-known saying, meaning that not everything that looks precious or true turns out to be so. For instance, the sand in the soil or on the beaches shines in hot sun. This doesn’t mean or we can’t say that it is gold, it is only sand. This can be applied to just about any experience in life, including a home loan offered by banks. Every bank offers a home loan, which means you are spoilt for choice. And, many a time, we make a choice unmindful of what the results or consequences will be. It is important to be informed, to make an informed choice. To be informed implies that you know the quality of a home loan on offer. You make a well-rounded decision considering pros and cons. Without sounding pessimistic, there are shades of grey to everything in life – nothing is so black and white. So, besides being aware about the liability or obligation to be fulfilled, you must realize that your right to know about a housing loan and your eligibility should far outweigh the banks right to hide some sobering truths from you. In zeroing in on the choice of a bank, patience is the better part of wisdom. Start you search by evaluating the home loan offering from lenders in the following manner.
Home loan eligibility:
The quantum of loan you are likely to get will depend on your monthly income and the value of the property. Typically, the loan amount would be 80-85% of the property value. However, it could be more in some cases. For property valued up to Rs 30 lakh, the customer can avail of a maximum of 90% funding, subject to his income eligibility as assessed by the lender.
The rate of interest on the home loan, which will influence the EMI and the total interest paid by you, must be considered before applying for the home loan. Shop around for rates and choose the most competitive one. You also need to find out if the rates are fixed or floating. When rates are fixed, there are no fluctuations. Floating rates vary according to market conditions.
Clarify sticky issues: Enquire about the processing fee that banks deduct for processing the loan. You must clarify the terms related to settlement/foreclosing the outstanding amount, transferring the balance to another lender’s account, prepaying a part or full amount of home loan, and other things, before finalizing a lender.
After-sales service: There are a number of post-disbursement services involved. These include getting regular account statements and interest certificates on time every year. Choose a lender with strong systems and good record of after-sales service.
It takes time to judge the banks and the housing finance companies on the above parameters. Never judge a financial institution on any one single factor. Be patient and stay informed. Patience may be bitter, but its fruit is sweet.