Importance of Choosing the Right Home Loan

There are various entry points that lenders take to approach you if you are a potential home loan customer. For instance, if you have already paid the booking amount for your house, banks acquire your data from the builder. If you have visited a property exhibition, banks approach you based on your information that you may have provided there. It takes caution and patience to choose the right lender for a home loan from the clutter.

Here are a few aspects to be considered while applying for home loan -

Credibility of the lender

A lender who approaches you with sugary words may not turn out to be so, once you are hooked. Before you commit to a lender, after calculating your home loan eligibility make sure that there is no likelihood of sudden decrease in approval amount from the lender. Credible lenders which include reputed banks maintain transparency at every stage.

Type of interest rate

Experienced borrowers feel that one needs to rightly choose between the type of interest rate - Floating or Fixed. A ‘Floating’ rate is the one which can vary during the loan tenure while a ‘Fixed’ rate remains constant throughout. Choice of type of interest rate should be taken basis market conditions i.e. if the rates are expected to go up or down and loan amount being opted for.

Percentage of interest rate

Do not hasten and settle for a lender who offers the lowest interest rate. Study all the terms and conditions along with reputation of lender. Arithmetic shouldn’t rule entirely. Under the pretense of a fractional discount in the interest rate, there could be hidden charges waiting to be imposed or service could be bad from the lender.

Decide on the right loan amount

With loans come monthly installments or EMIs. You need to choose the loan amount not only by calculating your current repayment capacity but also by working out other possible expenditures going forward.

Listen to your builder but choose wisely

Reputed builders usually have a panel of home loan lenders. Take advice from your builder on the lender you should go for. However, never settle for the suggested lender. Evaluate different lenders in the market basis multiple parameters suggested above and choose a right lender suitable for you

With competition getting stiffer with time, Banks and other lenders leave no stone unturned to sell a home loan. Ensure that you settle only for a reputed lender to ensure peace of mind not only at the time of entering into a loan but also throughout the tenure.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.