How to Choose a Bank for a Home Loan

Are you confused about choosing a bank for a home loan? You are on the right page. In this blog post, you will learn how to choose a bank for a loan, interest rate, terms and conditions, and documents. Catching a suitable bank for a loan can be more daunting than finding a house.

Check the interest rate while taking a home loan:-

Borrowers’ first intuition, is to pick the bank that offers the lowest interest rate, as even a slight change in interest reflects prominently on the monthly repayment. 

Resembling rates to find the best lender would, however, amount to looking at your home loan only from a partial point of view. Banks manage to levy various other costs on home loans, in the form of processing fees, technical assessment and documentation charges. 

The drawee could be asked to pay 25 base points to 200 basis points of the loan price, towards these charges, which considerably increases the overall cost of the loan. When you check interest rates, also try to find out if the bank is providing any disclaimer on these charges. Go for a blend that seems the most cost-effective.

 

 

Does the bank provide incentives for borrowers with good credit scores?

While the drawee's credit score has always been a main determinant of how much loan you are eligible for, your credit score also secures the rate of interest that the bank would charge from you. 

Hence, a borrower with an outstanding credit score may be able to avail of cheaper home loans by selecting a bank that offers such facilities.

 

Is your bank snappy in rate transmission? 

This has been a significant complaint of borrowers and the RBI. Even though banks are quick to increase home loan interest rates, as soon as there is any upward trend in the repo rate (the rate at which the RBI lends credit to them), they decline to show the same urgency when it arrives to pass on the rate cut benefits.

 It is for this basis that the banking regulator first raised the marginal cost of funds-based lending rates in 2016 and then replaced that standard with the repo-rate linked control.

 

Is your lender reliable?

Akin to picking a reliable builder while buying your home, you merely have to select a lender with a good market reputation. 

It is also vital to get an understanding of the financial standing of the lender. These numbers are typically available in the public domain.

 

What kind of after-sales assistance does the bank offer?

Buyers must also evaluate and consider a bank, based on its after-sales services, considering that the approval of your home loan application is just the start of a long-term relationship with the bank.

Terms and Conditions 

Most banks these days promise to endorse your home loan application fast. In most cases, you could apply online, along with all the documents & the lender would disburse the home loan within a week. Even though this helps buyers close the deal quickly, especially if he has already selected a property, this proposition is not without its demerits. In your over-eagerness to get the loan as soon as possible, you may not read the terms and conditions carefully. Rushing into a home loan also lowers your chances of considering other lenders.

 

How to Negotiate While Taking a Home Loan

You would be amazed to know the usefulness you could get from the bank, by negotiating for your home loan, especially in these testing times when the market is relatively low and financial associations are willing to be more genuine. You could persuade the banks to offer you some waiver in the processing fee or other fringe charges that they typically impose. You can use a good credit score to get yourself some peace in home loan interest, as well.

Documents you require when you apply through the bank:-

1) Passport sizes photos.

2) Proof of identity- Aadhar card, passport, voter ID card, ration Card.

3) Proof of address- Passport, ration card, utility bills, Aadhar card.

4) Proof of earning- Statement of your account, income tax certificate, and PAN details.

5) Property document- Sale deed, builder-buyer agreement, agreement of sale. 

For more details, Go & check out the financenu site;