There are a lot of challenges involved when you are looking to purchase your dream house. The first and most complicated step is choosing the right home loan scheme and the provider. There are a plethora of banks and financial institutions with which you can apply for a home loan. However, before finalizing your decision, you need to do thorough research and lookout for the best deal that meets all your requirements and fits into your budget. To help you in understanding better, here are some of the key pointers you need to keep in your mind while choosing the best home loan offer.
Interest rate: The most important factor that determines your ability and the ease to repay the loan is the rate of interest. A higher interest rate hinders you from taking a larger loan amount and makes it difficult for you to repay the loan amount. In contrast, a lower rate of interest enables you to avail of a larger loan amount and increases the possibility of easy repayment. Therefore, it would be the best idea to compare various home loan offers online and choose the one that has a low-interest rate.
Eligibility criteria: Every bank or financial institution follows certain criteria for evaluating the eligibility criteria of the applicants. This criterion varies from one financial institution to another. The main eligibility factors include the borrower’s age, income source, employment stability, and credit history.
Credit rating: People with a low credit score or credit rating may find it difficult to get a home loan sanctioned. A good credit score of 750 and above tells your lender that you are a responsible borrower and can repay your home loan on time. You can get your credit score by checking and downloading your credit report online. After knowing your credit score, you can take adequate measures to improve your credit score before applying for a home loan. Having a low credit history could reject your home loan application. Even if you get the loan sanctioned, you will get the loan at a high rate of interest.
Fees & charges: Most of the banks and financial institutions levy some hidden fees or charges which are not disclosed to the borrowers upfront. So, it is better to look for such hidden charges and compare the processing fee, down payment, prepayment costs, valuation fees, etc. before finalizing your home loan financial institution.
Terms and conditions: There are several important terms and conditions applicable to a home loan scheme which may impact loan sanction, disbursal, or repayment. Therefore, it is highly recommended to thoroughly read all the terms and conditions before deciding the bank or other financial institutions.
Turnaround time: Check the loan processing and disbursal speed of the financial institution or housing finance company. Opt for such a lender that has less processing and disbursal time. Normally, it takes 10-15 working days for a bank or financial institution to process a home loan application, and additional 3-5 days are required for the disbursal of the home loan. However, this time varies from one financial institution to another.
Services provided by the lender: As a home loan is a long-term commitment, you must check the services provided by the lender carefully. Check if the financial institution is providing services like tax certificates, provisional amortization, part-closure services, and reduction in the tenure/EMI after partial repayment.