While taking a home loan the only factor that has an all-encompassing impact is the interest rates charged by banks. However, individual requirements differ and one-size-fits-all theory may not apply to all home buyers and home loan seekers. Here is what you should consider before taking a home loan when buying a property in India:
Loan amount Generally, banks and financial institutions offer loans of up to 80 per cent of the total amount you pay for your chosen home. Some banks also consider lending up to 85 per cent. Going for the highest possible loan amount is advisable, if you are low on the initial down payment. Down payment is the amount you have to pay from hand during the onset of your home purchase. In some cases, home buyers end up taking personal loans or gold loans for down payment. Apart from being stressful (as this requires another lengthy paperwork), this may end up being costlier in the long-term.
Processing time – The time taken for processing home loans differs among banks. If a bank takes a longer time to process your loan, it involve several visits to your bank branch. Do a research about the efficiency of a bank or a finance company before you consider them for taking a loan.
The frills – While providing home loans, banks push buyers to take insurance policies along. In most cases, these insurance policies are either by a sister company of the bank or an insurer with which they have a tie up. While it is wise to insure your home, the best quote for insurance might not necessarily come from the bank you are taking loan from. If you intend to go with a combination offer, make all the calculations, consult others, negotiate for insurance before you consider it.
The discounts – Some financial institutions, especially co-operatives and public sector banks, offer special discounts during festivals, etc. They also offer lower interest rates to women, senior citizens. If a loan is taken based on such discounts, it would resulting in huge net savings.