When you start looking for a home loan, the first step is usually finding a suitable financial institution. But shortlisting one can be tricky, especially in a market bustling with a variety of options. Don’t worry, we’ve got you covered!
Here are some ways to choose the right lender for a housing loan.
- Check the loan percentage covered
A housing loan typically covers 80-85% of the property cost, but the individual loan percentage might vary from lender to lender. So, choose a lender covering a higher property cost, especially if you’re unable to pay a higher down payment amount. Once you do this, you only have to cover the remaining percentage of the property cost upfront.
If the percentage is low, you’ll need to pay a small amount, so you get to save some money to meet other goals. The best way to go about such calculations is to use a home loan EMI calculator.
- Consider the interest rate and charges
Lenders offer both fixed and floating interest rates on housing loans. While a fixed interest rate stays the same throughout the loan tenure, floating rates can change over time.
So, when comparing different finance companies, settle for one offering affordable interest rates since a lower home loan interest rate translates to a lower EMI amount.
In addition to interest rates, you should also pay attention to the different charges associated with the loan.
In fact, from loan processing charges to foreclosure charges and others, you should have a clear idea of your loan liabilities. So, before you sign on the dotted line, read the fine print carefully so you aren’t in for any unpleasant surprises.
- Credit score benefits
When you apply for a home loan, lenders check your CIBIL score to evaluate your loan repayment ability. Often, a higher credit score brings concessions such as lower interest rates and flexible EMI repayments. A score above 750 is considered good enough to enjoy such benefits. So if you fall within this bracket, don’t hesitate to negotiate loan terms to get competitive home loan interest rates.
- Check if your lender is trustworthy
With so many fraudulent activities happening online, it has become all the more important to know whether your lender is trustworthy. To do so, you can check the finance company’s record and see if it has a history of any wrongdoings and where it stands financially. Such information is usually available on the web. So, run a quick search and review customer feedback before you proceed.
- Consider the after-sales experience
Getting home finance from a lender is the beginning of a relationship that will extend through the length of your tenure. This involves frequent communication, accessibility of services over multiple platforms, and customer care. You want to choose a lender who offers all of these services with a faster turnaround time, so things are smooth throughout.
Final word
Buying a house using a loan is the start of a long-term relationship with your finance company. So it helps if you choose only the best. With the tips mentioned above, you can find the right financial institution in no time.