Most of us buy our home appliances, electronics, car and even other small or big things on the words of mouth. You want to own a car because your friend or your family member suggested you that it is a good car. Its mileage is good, or you will get the good deal or discount when you buy the car from that dealer. You should buy a LED TV of X brand only as its picture quality or sound system is good. Similar is the case of home loan. You apply to a specific bank or financial firms because your family members, relatives or friends suggested you about it with their experiences. This is not a wrong thing to learn from experiences of others, but in case of home loan, every customer is different and every situation is different. The banks or financial firms lend loan to anyone on the basis of their repayment capabilities and their present income. If the bank is not satisfied with your income status or the property, which you have opted to buy, there are chances that bank will reject your loan application.
But going deep into the application process and taking all necessary steps, it is also important to know maximum details about your loan and gather information about the loan term & conditions and other aspects. Get information about the lender and ask as many questions as you want to clear your doubts before applying for the home loan. Either you are buying ready-to-move-in property or you are buying an under-construction flat don’t trust the builder or agent blindly for home loan. You are the right person to judge and decide for yourself because you know your financial status better than anyone else and it is you who is going to pay the loan not anyone else. Therefore, take a decision which is based on calculations and evaluations not just on suggestions.
While finanlising the home loan lender different people have different priorities. Some prefer an easy and simple process, whereas others think more about the interest rate and repayment process and charges. Whatever, will be your take on home loan, you should ask few important question to your lender before applying and finalizing a home loan.
Ask about home loan disbursement process: Before applying for a home loan ask your lender to give you detail information about the home loan process. What is the disbursement process and how they evaluate the eligibility of the borrower? You should ask about all possible nitty-gritty related to the home loan before applying.
Is there any other financial product you need to buy along with loan: There are many banks and financial firms which will ask you to buy their life insurance or home insurance policy at the time of disbursing the loan or the bank agent will tell you that it is compulsory to buy an policy. In such cases at that very last moment, you are left with no other option then buying the policy. Therefore, you should ask your bank that is it imposing or include any other financial product along with your home loan. Paying premium for unplanned policy might increase your budget and incase if the bank will tell you that it is included in your EMIs than it will increase your overall loan cost. So take a decision accordingly.
How interest rate is calculated? Ask your lender how the interest rate is calculated. If you are availing the fixed rate of interest for two years or three years, after completion of that tenure what will be the rate of interest? For example, if you have taken the loan on the rate of interest of 12.5% per annum for two years on fixed rate, what will be your rate of interest after two years. Will there be a marginal change in 0.25% to 0.50% or you are going to pay lower or higher rate of interest on which parameters. It is always good to compare the rate of interest of different banks and then apply for a loan. If bank is offering you a different rate of interest or discounted rate of interest then ask what will be the maximum tenure of that discounted rate of interest?
Ask about the hidden charges: Banks charge you some extra or hidden charges, which they hardly tell you at the time of lending the loan. Therefore, ask your bank to give you a list of hidden charges or send you email or printed document about all the hidden charges. It will help in estimating the overall cost of the loan as well will let to know what will be the other charges and fee you are going to pay during the loan tenure.
Check your home loan agreement copy: Most of the banks provide similar kind of home loan agreement copy, but it is always good to get your copy and read it thoroughly before getting it signed. Read the documents carefully as it will help you to understand the loan terms and agreement in better way.
Do you need a co-borrower or guarantor? While applying for a loan ask from the bank or financial firm that do you need a co-borrower or guarantor? Most of the people add a co-borrower to increase the loan eligibility or to get the tax benefits for both the applicants. In case if you don’t fall under both the situations then take individual loan.