Selecting the right home loan product in the market becomes much more important for many of us to avoid any surprises later. There are as many as 50+ lenders in India who will be willing to give you a Home Loan. But whom should you choose? Do not tread the easy way of taking it from whoever arrives first.
Here are some important tips on a home loan:
1. Do Not decide on the basis of the lowest rate. Always ask for a comparison between at least 6 major lender from your mortgage adviser. Look at the best rate, margin offered, whether any other product is being pushed, how many times the lender has reduced rate in past two years, what is the maximum tenure offered.
2. The other rule of smart borrowing is what the order generation has been telling us all the time: don’t live beyond your means. Take a loan that you can easily repay.
3. Try to opting for a new products which saves your money. Standard vanilla home loan are cliche’ and won’t work for most of the clients who have surplus funds and taking the loan nowadays, borrowers have various requirement rather than just borrowing for the need of money.
4. Compare processing fees, whether it is for a fresh loan or for a balance transfer. Enquires in all the bank where you can finalise.
5. Read at the services perspective carefully because you are getting a long term relationship. Don’t trust fast on the first lender approaching you or the lowest rate of interest or may be, what your friend’s father suggests.
6. Your wealth manager, bank relationship manager, chartered accountant, tax-planner and your finance controller or CFO in office are great. Seek their guidance to reach the right mortgage broker.
7. If you take a large home loan, it is best to take a large insurance as well. Buy a term plan or the same amount to ensure that your family is not saddled with unaffordable debt if something happens to you.
8. Don’t chase the cheapest rate of interest. Find out a competitive rate and focus on the other aspects of the loan. Cheapest is not the best deal so look beyond it.
9. Choose a floating rate of interest over fixed, even if the latter has an attractive rate offer. There will be twists in fixed products. Many of you miss to note that there’s a foreclosure penalty applicable within the fixed term.
10. Do not get biased by your previous experience with another product, or what your friends, relatives & colleagues. This is finance, a pure mathematical product, so do your maths & decide accordingly.