What is your priority while selecting a home loan lending bank? For most of us it is the rate of interest that matters. But it is really important to choose the right home loan lender as you would be connected for about 10-15 years, that is, until your entire loan is cleared. In that case, making a low interest rate your only criterion would not be a good idea. Other factors like proper disclosure of terms and conditions, responsiveness to your queries, etc. also play a major role.
Given below are a few tips to help you choose the right lender:
Don’t Fall Trap to Low Interest Schemes- Nowadays a number of smaller lending companies are growing in the market. They offer unrealistically low rate of interests to their new customers and subsequently increase it in the name of increased cost of funds. You should check the credentials of such companies. It would be better to go for a company that has been in the lending business for quite sometime.
Don’t Apply to Several Banks at the Same Time- Maintaining a good CIBIL score is really important for negotiating a lower interest rate with the banks. However, if you apply at several banks at the same time, each such application can reduce your CIBIL score by 10 points which is not a good idea in the current market situation.
Fixed or Variable Rate of Interest- Decide whether you want to go for a fixed rate of interest or a variable one. This depends on the duration of your loan. A fixed rate is better for short term. Whereas, for long term choose a variable plan as the rates are likely to come down in a longer time frame.
Deal with an Ideal Bank- Reputed lending companies offer loans in different verticals such as car loan, education loan, etc. Many such banks offer preferential rates to their previous customers which would help a lot in meeting your varied financial needs in the future.
Ask about the Prepayment Charges- In future, you might want to clear your debt earlier than expected. But since this is a loss for the bank they either refrain you from doing so or charge some extra amount. You should discuss the waiver of prepayment charges with the bank.
A home loan is not just a one month or one year affair. You have to stay connected with the bank as long as you pay the EMIs. So you should choose wisely. Go for smart banks who offer easy services and have good track record of customer support. Negotiate because you have the right to do so. Find the right lender and stay relaxed.