Today, many lenders in India, including banks, and housing finance companies, offer a variety of home loan offers at competitive interest rates. From a buyer’s perspective, you may have different options but selecting the right loan offer is paramount. But how do you make the right choice? You must compare the features and benefits of different loan offers from various lenders and choose the best one that suits your needs.
If you are a first-time home loan borrower, here are a few tips on the critical factors you must consider while comparing different home loan offers.
All lenders charge a processing fee to process your home loan application. The amount may vary from lender to lender. While some lenders charge a fixed amount, others charge 0.5% to 1% of the loan amount you want to borrow.
Since the home loan amounts are usually, even a small difference in the percentage can make a considerable difference. So, compare the processing fees the lender is charging and go with the one that has the least processing fees.
Flexible repayment options
Generally, when you avail of a home loan, the lender expects you to pay a monthly EMI (equated monthly instalment). However, many people, especially self-employed people and small-business owners, find it hard to pay the monthly EMIs due to uncertainty in their income.
Hence, many lenders nowadays allow home loan borrowers to choose their own repayment terms and pay quarterly EMIs. So, if you are involved in a profession where you don’t get regular income, you can select a lender that gives you flexible repayment options.
As the name suggests, prepayment means paying the home loan before the actual tenure. When you prepay the home loan partially or in full, the lender loses out on the interest payments. So, to make up for the lost amount, they charge a prepayment fee on the amount you repay.
The prepayment fee is usually 0.5% of the amount you prepay. However, most reputed lenders nowadays don’t charge prepayment fees if you have opted for a home loan on a floating interest rate. So, when comparing different home loan offers, choose the one with the least or zero prepayment charges.
When you apply for a home loan, you must comply with the lender’s documents requirement. Generally, lenders ask you to submit property-related and personal documents like identity proof, income proof, residence proof, property title clearance certificate, NOC (no-objection certificate), etc. So, when you compare multiple home loan offers from different lenders, choose a lender that has minimal document requirements.
Also, make sure that the lender allows you to submit the documents online to avoid carrying the physical copies of the critical papers and risk losing them.
The most important thing to consider while comparing multiple home loan offers is the interest rate, as it has a direct impact on affordability and repayment. You must choose a lender that offers the loan at the most competitive interest rate. The lower the interest rate, the lower will be the EMI, making the repayment easier.
Now that you know the different factors to consider while comparing home loan offers, do your research well and choose the right lender and home loan offer so that you don’t face any issues while repaying the amount.