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Know Your Lender For Your Shelter
by Naomi |February 3, 2020 | Architecture

“A house is not a home unless it contains food and fire for the mind as well as the body.”

Benjamin Franklin

We have all dreamy of a perfect home where we’d like to experience life with our loved ones. Big or small we all have our own ideas of a dream home. But sadly, not always can we afford the home we dream of and that’s where the banks come in; helping us finance the home we want. But, do they actually help us? Let me help you find the best loan for YOU!

Costs related to a Home loan:

  1. Processing Fees– This is the first prominent fee one needs to pay with the loan application. The fees varies from 0.25% to 1% of the loan amount and is non-refundable i.e. you have to pay it irrespective of whether your loan gets sanctioned or not.
  2. Legal Advisory Fees- The fees you bear to get the property’s papers verified and scrutinized by a legal advisory or a lawyer and prepare a report on the basis of which bank will decide whether the property can be financed or not. This fee is also non-refundable and needs to be paid with the loan application.
  3. Stamp Paper Cost-This is a nominal expense of about INR 300 which is required to buy legal stamp papers once the loan has been approved and write down legal home loan agreement between you and the bank.
  4. Cost of Home Insurance Premium- Insuring your home is a recommended option, which some banks have as a mandatory requirement. This insures your home against any natural calamity and other threats which can potentially destroy your property.
  5. Cost of Home LOAN Insurance Premium– Home loan insurance is different from home insurance. The first insures you against the home loan liability; the second i.e. home insurance, insures your property. Home loan insurance can also act as your guarantor,in case your credit report is NOT good and the bank wants you to provide a guarantee to support your home loan. This is a big expense if you opt-in for it. However, it is recommended to cover the Buyer’s dependents, in case of his demise.
  6. Service Tax on Bank Fees– Service tax is another amount that is charged by banks on the amount that you pay them as fees.

Right Loan Provider  – Factors to Consider:- Six factors for selecting right home loan provider:

  1. Processing speed– It should take not more than 10-15 days for a loan to be processed and additional 3-5 days for the loan amount to be disbursed.
  2. Lending criterion– Different banks have different lending criterion for the estimation of the loan amount and in general the approval of a loan. For eg- age, job profile, credit history, etc of the borrower.
  3. Repayment of loan–  Banks have terms and conditions for the repayment of the loan and also for an early part payment / repayment of loan. You must refer to the terms related to the settlement/ foreclosing the outstanding amount in detail before finalizing a lender. As per RBI Directions, a bank can NOT charge Foreclosure Charges.
  4. Cost of loan– Banks have certain other charges related to loans, irrespective of the loan being sanctioned. Refer to the beginning of the article for a detailed explanation.
  5. Fixed vs. floating rates– In Floating Rates, Rate of Interest keeps changing, where as in Fixed, it is Constant. In Hybrid, the rate is Fixed / Floating for a period & changes thereafter. As a thumb rule, if the loan period ranges between 2 to 5 years, going with a fixed interest rate is better, and Floating rates are more suited for long term loans. You can even go for a hybrid loan, which enables the borrower to enjoy the best of both fixed and floating interest rates.
  6. Hidden charges– Hidden charges is something that tends to prick the pocket of borrowers the most. Thus, while narrowing down the options, it is advisable to compare the processing fee, down payment, valuation fees, prepayment costs and other charges levied by different lenders.

     In case of any further queries, we would love to hear from you.

     Leave us a message on –FacebookBlogemail– biraj@colonelz.com

Reference Link:- https://colonelzbricklogic.blogspot.com/2015/02/houseis-not-home-unless-it-contains.html

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