How to Get Home Loan in India Easily
The real estate market has seen tremendous growth in the last 6-7 years and is one of the biggest factor in contributing to the India’s economy both in terms of contributing to the GDP and employment generation. And as predicted by ASSOCHAM, the business will touch USD 90 billion by the year 2015.
Even with the big demand there have been no signs of reducing interest rates on the home loan. Although you get home loan easily but complexity lies in choosing the best option. In 2013, the base rate hike by both the public and private sector banks in India resulted in increased EMI and home loan rates to increase. Although this base rate hike was temporary however there are no signs so far on reducing the home loan interest rate and EMI. So under such tough condition how to get home loan in India easily and what planning should home buyer make in order to crack a deal and get best rates on home loan. Although banks offer you instant home loan approvals, you should not hurry in finalizing the lender.
Checklist Before Buying Home Loan in India
Listed below are steps to consider:
1) Decide on the location: First and foremost step is selecting the home city and area depending on your budget.
2) Raising Finances: Once the location is finalized, check out on raising the funds on own by liquidating the assets and savings. Then finally calculate the loan amount needed.
3) Catch best deal in the market: Most important step to get home loan in India is scanning the market for the best home loan options available. Factors to consider before finalizing the home loan provider is the interest rate and tenure. There will be a marginal difference in the interest rates by private or public banks. You should also make use of social media in order to get the review by existing clients and understand about any hidden costs, customer service etc. This will give you a fair idea in selecting the best provider. In fact, buyers should also contact local banks to check any special offers/options available with them without any hesitation. After all it’s your money and end of the day, you’ve to make the payment.
4) Negotiate: Never hesitate in negotiating with the loan provider for the final amount required. There is a very easy formula to calculate the final loan amount = Total valuation of the property – Money in hand. You should also negotiate on reducing the interest rates and extending the tenure.
5) Fixed or Floating Interest Rate: Finalize which interest option – fixed or floating interest rate suits you better. This one is the most critical decision borrower has to take, as both has it’s pros and cons. So solution is comparing the details from multiple providers. But important thing to note is that in case of floating interest, your EMI varies every month due to fluctuation market condition resulting in entire family budget getting affected.
6) Minute reading of the agreement: Before finalizing the loan, thoroughly read the loan agreement and understand all the clauses and how it gets applied in different scenarios. Most important factors to consider are:
- Interest rates
- Maximum loan quantum
- Loan tenure
- Pre-closure charges
- Terms and conditions
- Missed/Late EMI penalty/charges
- Conditions for switching home loan to different provider
- All verbal assurance by the lender should be in written to avoid any unforeseen problems in the future
- Make sure no administration/service/processing fees are applied explicitly because this is inclusive on the loan sanction amount
7) Bank processing charges: This is a preliminary service fee (actually an overhead expense) and is a small percent of the loan amount and this should not exceed beyond INR 10,000.
Considering all the above mentioned points will help in you in getting home loan in India quickly and in an hassle free manner.