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While choosing your lender for borrowing a home loan you should stay more conscious and careful. This is not the matter of few days or months, but the matter of at least more than 10 years. There are plenty of lenders in India, who are willing to offer you the home loan at competitive rates. But, offering you a good rate, does not mean that the lender is good or you are getting the best deal. Before borrowing the loan ask yourself, are you getting a good deal? Whom should you choose as your lender? Don't go with the saying first come, first served only. Ranjan Kumar, an MNC executive, decided to borrow the home loan to buy a two BKH in Delhi. He applied for a home loan in a bank without doing much research in the market. He thought that the bank is offering him a good rate and no other banks will offer him that lower rate of interest on home loan. But, later on, he realized that the bank is not much flexible and will charge him money on making pre-payments and on foreclosure of home loan. This way he lands into the foul curry and trapped himself for 20 years of the financial burden.
To avoid such instances in your life, one should take a well-researched and calculated step. It is not easy to take this decision, as your whole financial cycle revolves around your loan for that particular time. You should not forget that you have to repay the amount. This is not a favor from the bank or a gift you receive, but an amount you borrowed from the bank. This is a financial liability to you and in case you fail to repay your loan the bank will take over your property. All banks take original documents of the property as security before the lending loan. Therefore, you should not forget that your property is mortgage with the bank and in case you fail to repay the loan, the bank has all the rights to sell your property or acquire your property to get the dues. So, think thousand times before applying for a loan. Don't get trapped by the marketing tricks of these banks apply to attract customers. Take a well-informed decision to meet your financial needs. Here are 10 useful tricks to get the best loan offer.
- Don't go for lowest rate only: Most of the people want to get a loan at the lowest rate of interest. If the bank is telling you that they are offering you the lowest interest rate, just check online by visiting various sites to find out whether the bank or financial firm is not fooling you and they are actually offering you the competitive rate of interest. The minimum rate of interest offered by SBI Bank is 8.60% p.a. for women borrowers and 8.70% p.a. for others. If the bank is offering the same rate of interest with flexible terms and conditions, then only go for that loan.
- Go for floating rate of interest over fixed rate: If you are availing a loan for fixed rate of interest for the period of 3 years or five years it is a good choice, but for a loan of more than 20 years ask for floating rate of interest. In fixed rates, the interest and EMI amount will be fixed for the whole tenure, but in floating rate of interest, it will change month-after-month. In case, if the RBI will reduce their interest rate it will not get implemented if you will opt for a fixed rate of interest. But in floating rate, you have the benefit to get reduced rates as per the instructions of RBI. In most of the fixed rates you have a foreclosure penalty, so if you are planning to foreclose your loan, just get ready to pay some extra amount apart from your remaining outstanding.
- Opt for reducing balance: Ensure that your opt for a lender who is offering you daily reducing balance and not monthly. This will create an impact on the partial payments. If you are taking the monthly reducing rate of interest, the pre-payment done between the two EMIs will be taken on the interest rate of the next month, not on your previous month's EMI. This way you will pay more money if you want to close your loan.
- Don't get biased by previous experiences: Don't make your mind for applying or not applying to any specific bank because your family, relatives or friends have some good or bad experiences with specific banks. This is all about calculations and mathematics, don't take a decision based on emotions, rather make a decision on calculations.
- Read reviews and comments online: Before making the final decision of borrowing loan from any particular bank or financial firm, try to read some customer experiences with the bank. If most of the people giving a negative feedback or comment about the bank, it indicates something is really wrong with the services or product. In case people are praising a bank in maximum comments published, you can also think about trusting it as your lender.
- Take expert advice: You can also take advice from some industry experts before taking the loan. Professionals of this field can suggest you about different banks, their terms and conditions and important factors. You can also visit different banks personally to enquire about their product and get information based on calculations and different parameters.
- Get information about different products: While borrowing a loan, try to get information about different products under the home loan. Some banks offer different loan products under home loan category. So try to get the information about different home loan products to know the difference and choose the most suited for your requirements.
- Look for the best post-services: This is one point, which most of us never bother about while taking the loan. You are going to take the loan for a longer period, so the post-sale experience and services are really important. If the bank is not good and flexible with post-sale services, try to find out some other lender for borrowing the loan. In case you shift to some other location, or you want duplicate documents or duplicate annual fund statement if the bank is not customer friendly, it will be tough to maintain that long-term relationship with the bank.
- Get facts from 5 different banks: Collect information from at least 5 to 6 different banks before making your mind. It will help in doing a comparative study and analysis of different bank and their interest amount. By doing a comparison you will be able to decide, which bank is the most suitable to meet your requirements.
- Read all the documents carefully: This is always a mandatory thing published on all documents, but most of us hardly pay any attention to this clause. One should read all the documents, terms and conditions carefully related to your loan. This will help in understanding the product in a better way and will give you more detailed insights about the product, which a salesman or bank will never tell you. Don't sign your documents in hurry! Take your own good time to read the documents carefully.