Choosing the right home loan can be an intimidating task for many borrowers. In this article, we will shed light on some important factors that a prospective buyer should keep in mind while choosing a home loan lender.
This post will throw light on the important factors that you should consider before picking a housing finance company.
Once you have made up your mind to apply for a home loan, the next crucial step is to pick the best home loan scheme. There are lots of players in the housing finance market that are eager to offer home loans to prospective home buyers. Thus, instead of blindly running behind tempting offers, it is important to find out which lender is offering the best deal.
- Choose a Reputable Home Finance Company: Since you will be entering into a long-term relationship with your house finance partner, make sure you choose a home finance company having a good track record. At the same time, do not get lured by lenders offering exceptionally lucrative home loan schemes in terms of interest rates.
- Credit History: In order to obtain a housing loan, you should have an impressive credit history. Some lenders do offer home loans to individuals having a poor credit score; however, such borrowers have to pay a significantly higher interest rate on the loan than someone with a high credit score.
- Interest Rate: Before applying for a home loan, it is imperative to consider the rate of interest that will be charged by the lender as the interest rate of the loan will influence your EMI as well as the total interest that you are going to pay. Thus, it is advisable to do a bit of research to opt for the most competitive interest rate. At the same time, it is important to find out if the interest rates are floating or fixed.
Floating interest rates keep varying as per market conditions whereas fixed interest rates remain constant irrespective of market dynamics. If you are opting for longer loan tenure, it is advisable to opt for floating rates, whereas for a shorter tenure, fixed rates work best.
- Read the Home Loan Documents Properly: Once you shortlist few housing finance companies, make sure you go through their terms and conditions carefully so that you can pick the right lender to meet your housing finance needs. Once you finalise a lender, make sure you do not sign the loan agreement without understanding all terms and conditions pertaining to eligibility, interest rates, and repayment period. If required, do not hesitate to take an expert advice so that you do not end up choosing a wrong lender. Furthermore, you should also find out how much time the housing finance company will take to disburse your loan.
- Know the Hidden Charges: It is important to read the home loan documents thoroughly so that you can identify the hidden charges if any. Prepayment penalty can be the priciest hidden cost that you may have to face. Since the Reserve Bank of India has abolished pre-payment penalty on home loans, make sure your housing finance company do not impose the penalty on you.
These guidelines will help you hunt for the best home finance company. Choosing the right housing finance company is as important as choosing your dream home. A bit of diligence and inquisitiveness to learn about the home finance players can go a long way to help you find the best home finance partner.