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Read this before choosing your home loan lender

Saturday, June 23, 2018

If you are not careful while choosing your home loan lender, you may well have to pay through your nose. Here’s a must-read guide

While looking for a home loan in our quick-fix world, there is one thing that is crucial to remember - getting a loan is easy, but finding the right one can be a difficult process. With the home loan market expanding, and the target audience becoming far wider, banks have become very aggressive about increasing their home loan portfolios. At this time if you are on the lookout for a loan you have to be careful about home loan procedure. So, as they say-it is better to be safe than to be sorry. Here are some tips on how to avoid making mistakes when choosing your home loan lender

Communicate clearly
When you finally decide on the property in which you want to invest, speak to your bank about it. While most banks will provide finance for ready to move in properties, some banks do not readily finance a property that is being self constructed or a property under construction. Also, if the property is very old or is being developed by a relatively unknown builder, the bank might have an issue with providing a loan. To avoid such circumstances, communicate clearly about the property you are seeking finance for.

Loan eligibility
Banks have different ways to calculate loan eligibility. Some banks will club the incomes of two siblings for the purpose of calculating the loan eligibility and some will not do it. Others may take into account, only male siblings. It may so happen that based on your own income, as well as your spouse's, the amount of loan that you may require does not work out. Then you must seek a bank that allows you to club the incomes of your other close relatives to increase your loan eligibility.

Be ready for down payment
Home loan amount is generally restricted to a maximum of 85% of the cost of the property. So, when you want your own house, make sure that your piggy bank can provide what is called the down payment.

Property evaluation
Once you find property, the bank will get the cost of the property evaluated by its own property valuer. This evaluation can be much different from the actual price you are paying for the property. In such cases, you will need to shell out the difference between the actual price and the bank's valuation as additional down-payment.

Digital option
In this digital age it has become very easy to search home loan lender as you want. In virtual world lenders are just a click away. There are so many web portals and apps which will give you better deal along with good stuff of information. Once you have short-listed the potential banks, get the short-listed banks to compete for your loan.

Compare lenders
Before you finalise your lender, apart from the interest rates-check on the various kinds of fees applicable. Shop around for lenders and compare fees like processing fee, pre-payment charges, legal fees, valuation fees and other hidden costs.

Home loan insurance
We run into all kinds of risks, in our daily life. Accidents and health issues can cause loss of income or in some cases even your life. While most financial advisers suggest that you pick a term plan substantial enough to cover the loan, insurance companies also offer loan protection plans that are designed to take care of the outstanding loans in case of unforeseeable circumstances.

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