Home Loan - Tips you Need to Consider

By: Aditya Jaiswal

With the economy 'shining' and salaries heading northwards, individuals can actually find their dream of a big house in a posh locality come true.

Today's youth are hard working and career driven and are not ready to compromise on the quality of their dream house for a few bucks. There are a multitude of home loan banks in India to choose from. The home loan industry has never looked more lucrative with real estate experiencing a boom, prices are heading upwards. Housing finance companies (HFCs) are providing platter full of advantages to woo the borrower with value added services and flexible products.

To find cheap home loans in India, there is an array of possibilities. Individuals can borrow from bank as home loans. Various housing finance companies (HFC) provide personal loans. Another option is loan against property (LAP) - a loan given against the mortgage of property.

Before taking a loan, there is some homework you need to do:



Five steps in choosing the right loan

The current housing loan market requires proper research before opting for a loan. One should not get carried away by tricky advertisements. Rather than banging head with terms like special interest rates for fixed tenure, hidden terms and conditions etc its better to opt for the bank that offers the lowest EMI (equated monthly installments).

1. Gather data on interest rates

It is a wise proposition to get interest rate information from more than one source and compare the offers. A long term loan will mean lower EMI but probably a higher interest rate and result in paying more for the house.

2. Enquire fees

The processing fees, administration charges and the quantum of loan should be discussed properly. It is better to have a written statement of all fees connected to the loan from the lending bank itself.

3. Pre-approval letter

Sometimes banks issues a pre-approval letter agreeing to finance a certain amount. This gives a significant weight and sellers deal seriously. One can expect a modest price range and negotiate a better deal. This is more important if one is taking bank loans for commercial properties.

4. Negotiate loan

Most loaners will bring down their charges for customers with a dependable reference, so do not be shy about bargaining. A bargain deal will easily fetch a home loan at around 0.25-0.5% lower than official rates.

5. Avoid greedy lending

Do not deal with person who asks you to include fictitious data on your home loan application to get quick approval. Also do not get pressured into borrowing additional finance than needed.

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