05 July 2011
Must Read Points to Compare Home Loans
Taking a home loan is not a one time decision like eating an ice cream, as the moment passes so does the ice cream. It is a decision that you have to bear for many years; the whole repayment tenure may lead up to 10 to 20 years. How to make the right decision of selecting the best home loan?
Few important points to consider when you compare various banks and lending institutions and select the best offer to apply for a home loan.
Eligibility – you are eligible for which loan and the amount you can avail as loan. This will indicate your financial standing or repayment capacity, age, qualification and incoming salary every month. Only when you fit in these criteria will the lender offer you a home loan. So first check whether you are eligible for this loan and then apply only to those institutions who are willing to offer you a home loan.
Documents required for applying for loan- Enquire before hand about the documents required for this and whether you have all these ready. This information can be got from any financial advisers or any administrative assistants of lenders. One can also get information from the internet from various websites of banks or private lenders.
Interest rates – select the best suited to you. Compare, tally and weigh all the pros and cons of interest rates before choosing any lender. You will see a wide variation in loans offered at different interest rates. Study the repayment structure, penalties during pre payment and fees for late payments of EMIs.
Fixed or floating interest loans- This will depend upon your monthly incoming salary and total income. Whether you are comfortable with fixed or flexible rate of interest is totally your personal choice and this will depend upon your repayment capacity.
Other costs- Many other costs are listed in small below any agreements. Do consider all these and jot down these for calculation. Transfer fees, agreements, taxes and other administrative fees all will amount to a substantial figure.
Penalties- Late fees and pre closure of loans are two important points you will discuss before hand with the lender. In case you skip and EMI or wish to club EMIs what facilities are available for this, and in case you want to close you home loan or request to transfer your home loan to another lender do inquire about the penalty fees as this may be 0.5% or 1% of the total amount taken as loan.
After going through all these points compare all the offers by different lenders. Take separate quotations and then decide which suits you the best. Go ahead and then apply for a home loan and get that dream home you have on your wish list.