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How To Select Your Home Loan Bank

The experience of a customer with a home loan provider is a very vital component of the day-to-day dealings, as this is a long-term loan where there will be lots of occasions when the two parties will have to interact. The loan provider should have a good service track record as this will help customers in solving any problem or concern regarding their loan. The comfort level of the borrower should also be high. This will lead to a higher level of satisfaction as far as the borrower is concerned.

The option for any prepayment of the loan also has to be considered. Many people have a plan whereby they will not continue with the loan for the entire duration of its term but would prefer to pay off the loan at the first possible opportunity. This can happen whenever they get some money that they can spare for this purpose and hence would like to reduce their burden. Thus, the possibility of prepayment has to be taken into consideration. In many cases, there may be an extra charge when it comes to a prepayment and this also has to be compared across lenders as it is an extra burden to the borrower.

The strength of the lending institution is also important because the borrower would not like to have any problem with the institution itself, especially when some part of the loan is to be disbursed at a later date. This can impact the flow of funds and also there might be some issues as far as the repayment is concerned if the institution is not strong enough. Thus it is always better to go with strong players who are expected to remain in business over a longer period of time.

Another solution to this problem would be pledging your liquid financial assets such as bonds, shares, securities, fixed deposits, insurance policies with existing high surrender values, etc. in lieu of the 15% to 20% margin money that you might be required to pay.

You can also obtain a loan by surrendering your life insurance policy to the life insurance company or to a bank.
A few banks tie up with well-known builders who provide ready-to-move-in flats. Such flats are partly or completely renovated and come with furniture, which would otherwise not be included in the ‘cost of the house’. In such cases, you will get a bigger loan from the bank, depending on your income. Also, this will reduce your spending on these things when you move in.

You could also be eligible to take a loan from your Employees provident Fund account if you have had an employee provident fund a/c for more than 5 years.

You can also make the down payment using your credit card. Although it is never recommended and should be done only if you are falling short by a very little amount because the interest you pay on such a loan is around 35%, which proves to be much higher compared to a personal loan where you would be paying an interest of around 20%.

If you have a good track record at your bank then you can also go for a bank overdraft facility/loan which could be another option to generate money for your down payment.

Categories: Home Loans