Some of the most important factors to consider when applying for a home loan are as listed below
- Rate of Interest: it is necessary to check for the best rate of interest offer in the market. The rates at all Indian private banks ( ICICI/HDFC/Axis etc) are the same currently and may remain that way for some time. The only other bank that has a slightly lesser rate is SBI and Citi Bank. So it’s important to do a little research on what the rates are before finalizing the bank as even a 0.1% difference in the rate can mean a substantial increase in the interest outflow. It’s also important to know whether you are choosing a Fixed Rate of interest or a floating rate of Interest. The floating rate of interest will mean that your EMI will keep moving up and down basis the changes made in the base rate of the Bank.
- Eligibility: It may sometime happen that I may get a better rate from a particular bank but may not get the requisite loan amount, in this scenario it becomes important to go along with the bank which gives you the maximum loan amount. So along with the rate of interest it is very important to also check what is the maximum loan the bank is willing to sanction you basis your income. Every bank has its own way of calculating eligibility of a customer and hence it is important that you get a fair idea or a commitment from the bank on the loan they can disburse to you well before you start the entire application process.
- Project Approval: You would be advised to also check if the bank in which you are applying for a loan has approved the project in which you are buying your house, this ensures that you do not have to do any additional leg work for getting your property cleared through the Legal and technical of the bank as the bank has already cleared the project for funding, which means it has done all the requisite legal and technical checks on the property and cleared it for funding. If a project is not approved by a bank then the paper work required to get a loan goes up many fold as the customer is then expected to get the requisite property documents for the entire project from the builder and that can be a very time consuming and laborious process. Its always smart to stick to banks which have already approved a project than go to a bank which has not.
- Ease and speed of Operation: Most home loan transactions are time bound and usually should be closed within 20 to 30 days time. Given this scenario it is also very important to also check the ease and speed at which your loan can be processed from the bank, SBI for example takes a minimum of 30 days to disburse your loan, some builders have a penalty clause for delayed payments and at times it may even lead to cancellation of bookings, so it’s advisable to also go along with a bank which has the ability to process the home loan application within 10 to 15 days so as to ensure that you do not end up in a situation where you are forced to pay penalties for no fault of yours. ICICI and HDFC banks are the most preferred options for most customers for this reason as they offer a very fast turnaround time and have excellent customer service facilities. Even their online platforms are very popular among customers.
- The foreclosure and preclosure penalties have been waived off by all banks and hence the possibility of any bank charging you extra fees these days has come down thus creating a relatively fair and level playing field.