You have decided to buy a house and have zeroed in on the house you want to buy. The next step is to apply for a home loan. You have to first identify a home loan provider. It may seem like a daunting process as there are so many banks and other institutions operating in the space of providing home loans. So how do you decide which home loan provider is right for you? You can start by evaluating the offerings using the following parameters.
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Loan eligibility and loan amount -
There is no doubt that home loans offer a multitude of benefits. Today, you are allowed to customize your home loan as per your requirements. The loan amount that you are eligible for will depend on your monthly income as well as the value of the house you are buying. Typically, you can get a loan for around 80-85% of the cost price of the house. In some cases, it may be more. You need to keep in mind your current financial situation before applying for a loan. Take an account of your financial responsibilities, debts, assets, and liabilities. Set aside the money needed every month to cover these expenses. Also, factor in any big expenses that you might have in the near future, which include getting married and having a baby, among others. Post that, use a home loan emi calculator to arrive on how much EMI you will have to pay for the loan amount you want. Apply for a loan only after you have clarity on all these numbers.
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Interest rates
Your loan interest rate will decide your EMI. Look around for the most competitive interest rates. Choose either a fixed interest rate or a floating interest rate, depending on your requirements. Ideally, a floating interest rate works better if you are opting for a long loan tenure.
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Processing fees and other charges
Most loan providers charge processing fees for processing your home loans. At Sammaan Capital, we charge a flat processing fee of 10,000 INR for a loan amount up to Rs. 30 lakh. For a loan amount above that, the processing fee varies between up to 0.50 % to 1.00% of the loan amount. Your provider may also have certain clauses for pre-payment. It is important to understand all of these clearly, before finalizing on a provider. Remember that if your CIBIL score is high, you can ask for a waiver in processing fees and lower interest rates.
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How responsive they are to change in interest rates
Check if your home loan provider offers you a switch policy to get a lower rate of interest benefit, following changes in policy by RBI. If you find a lender who reduces rates in sync with the reduction in rate by the RBI, you should consider that provider. Chances are you will get a fair deal from that particular lender now as well as in the future.
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Other factors
Take note of other factors like the documentation required. Most loan providers require the same set of documents. For instance, we, at Sammaan Capital ask you for your application form, processing fee check, property documents, KYC documents (ID proof, address proof, signature proof), and Income-related documents. There are no hidden charges and you can expect speedy processing of your home loan post document verification. You can also apply for regular certificates and statements for claiming Income Tax returns on your home loan amount.
Once you have done your homework, choose a provider that fits best with your budget and your requirement. Home Loans offer many benefits and choosing the correct home loan provider may require some time and effort but it is well worth it. It gets you closer to your dream home and ensures a smooth and trouble-free loan tenure.
