Common dilemmas of home loan customer
Obtaining a home loan is never an easy process, not that your eligibility for it is the issue, but there are various dilemmas that confront you as you apply for home loan. Following are some of the difficult choices that you may have to encounter as a home loan consumer and the solutions suggested by our expert team:
Fixed or Floating?
You may find it difficult whether to choose a fixed rate or a floating rate home loan.Though fixed rate loan is offered at a rate higher than the floating one,the former can safeguard you against any prospective increases in interest rates. However, at times when interest rates are regularlyfalling, you will find fixed rate home loan even costlier, therefore, not a wise decision to make.
If you go for a floating rate loan, you may reap the advantage in the event the RBI relaxes its monetary policy and the interest rates go on the downward spiral. As most home loans are generally for a long period, entailing several cycles of increase and decrease in interest rates, floating rate home loan turns out to be a good option on an average.
Switching Back Option:
Home loan interest rates undergo various cycles. In case you have obtained a fixed rate loan but find out that the
Get the best home loan deal:
As a borrower, your priorities are to get themaximumhome loan amount at the best possible interest rate. Sometimestheloan amount may get reduced if the bank does a lower valuation of your property.
On your part, you should provide all copies of property papers, NoCs, and clearances issued by the development/building plan sanction authority along with your application form. Then try to negotiate the best home loan deal with lowest interest rate, which may include approaching different lenders and comparing their offerings. Subsequently, you can negotiate on reducing interest rate charges even waiving off processing fees.
Giving or hiding full details of your existing borrowings:
Most lending institutions go for checking your repayment track record, including credit cards with the Credit Information Bureau Limited (CIBIL). So, you should never hide any disclosure about your existingor past liabilities.
Low rate basic loan or the one with several amenities:
A low interest rate home loan with minimal features is known as basic rate loan. The smallest amount of interest paid over the loan term is always an advantage but other features like flexibility, low fees, no prepayment charge, and good customer service are also important. It is wise to go for a loan that has a competitive rate and all features and benefits, enabling you to operate it easily and effectively.
Higher EMI Vs Increased Tenure:
It depends on a host of factors like your age, your overall financial situation and the future course of home loan interest rates. Sometimes it may be wise to
But if you are financially burdened at present, you may stick to the same EMI and lengthen the loan tenure. So, better to have a look at your monthly budget.
Remember, in any case, banks generally don’t extend tenure beyond retirement age (60 for salaried individuals and 65 for self-employed). Secondly, banks put a cap on the maximum tenure and it may not be possible to increase it beyond 20 or 25 years.
Prepayment:
You may make some partial re-payment to reduce your outstanding balance and the overall cost of your property purchase. Thus, your EMI won’t rise even after taking into account the higher interest rates. But if you choose to pre-pay, please check if there is any penalty for the partial pre-payment of your loan.
