4 things to look for when making Home Loan comparisons
Buying a property is one of life’s biggest financial decisions. So, before you apply for a loan, you should talk to multiple lenders, do a careful home loan comparison analysis, negotiate the terms and conditions, and then apply. You may have to make a bit of an effort, but know that these steps can help you save bucket loads of money in the long run!
Let us take a detailed look into the procedure on how to compare home loans:
- Gather Information from Different Lenders: Different financial institutions quote varied prices and features. Thus, it is critical to talk to multiple lending institutions to analyse the options available. This will help you narrow down to the one offering the best deal. Bajaj Finserv for instance, offers Home Loans with features like online account access and part prepayment facility.
- Understand the Different Types of Loans: Borrowers often don’t understand complicated financial concepts and jargons. To avoid such a situation, first focus on understanding the different types of loans that are available in the market. For example, there are two kinds of home loan interest rate opinions. The first is a fixed interest rate in which the interest stays constant for the entire duration of the loan repayment. The other option is called the variable interest rate. If you opt for this, then your interest rate will fluctuate. The EMI will remain the same, but the duration of the loan will be directly proportional to the current interest rate. In simple words, if the rate increases, so will the duration of repayment. The vice-versa also holds true. Carefully comparing home loan interest rates between these two options will help you figure out which one works best in your favour.
- Charges and Fees: There are many charges that are levied on the customer by the financial institutions. When you compare home loan rates, take into account every single payment that you will have to make from the start to the finish. Ask the lender for a list of such charges, so as to make it easier for you to do a better home loan comparison between different institutions.Let us take a look at some of these charges:- Processing fees is charged even before your loan has been sanctioned. This covers the procedure during which all your documents are verified.- Mortgage Deed Charge (MOD) is one of the biggest payments you have to make when taking a loan. Most financial firms in India charge about 0.5% of the loan amount. For example, if you take a loan of INR 80 lakhs, then the MOD will be INR 40,000. You will find lenders who are willing to waive this charge off. However, be careful of any other hidden fees that may have been sneaked in to compensate for the waiver.- Legal fees are paid to lawyers who the lender appoints in order to verify the legal status of your property for which you are seeking the loan. The lawyer fees are paid from the customer’s pocket.- Foreclosure charges come into the picture if you have plans to repay your loan before the maturity period ends. Paying off a loan early is always a good idea, but check that you don’t have to pay a penalty for doing so. Only take a loan from those companies like Bajaj Finserv that have nil foreclosure charges.
– Some other fees that may be included are portability fees, EMI bounce charges, stamp duty, etc.
Always remember to compare home loan charges diligently, and to have an open discussion with the lender. Negotiation, if done smartly, can save you a lot of unnecessary expenditures.
- Features: Different lenders offer different features! A home loan comparison should include what you will and will not get when you opt for a specific loan. Some features are mortgage portability, EMI holidays, online account access, split interest loans, and lump sum repayments. Also, some lenders offer lock-in periods of just 15 days, whereas others give you 60. Ideally, it is better to have more time on your side.Once you have compared home loans, selected the lender and negotiated a deal, you can then apply online for a home loan. Once it is sanctioned, you are ready to buy your new home!