As on today, there are many financial institutions which provide loans such as personal, vehicle, home, top-up loans and the like. Home loans are for a longer period of time and due to attractive interest rates, many financial institutes come forward with various complimentary and supplementary offers and schemes. Many times, it becomes difficult to choose between various options available. Here are a few quick tips which can be helpful in this regard.

Amount needed

Thisis a very important factor because higher the amount, the rate of interest shall be higher and same is the case with the term of loan repayment. It is important to keep this amount as close to the requirement as possible, so that one doesn’t have to repent the decision taken, in future.

Eligibility

As per the recent guidelines, an individual is eligible for loan worth90% of the property value, if the property is valued below 30 lakhs. However, for property worth 30-75 lakhs, the loan amount is 80% of value and above 75 lakhs it is 75% of property value. Apart from the property value, the income of the applicants is taken into consideration. You can also check the Tata Capital home loan eligibility for more details.

Rate of Interest

The EMI and the rate of interest are the two factors that need to be checked, before finalizing the bank or financial institution for applying the home loan. It is highly recommended to check the interest rates of the various banks and/or financial institutions, and choose the one that offers the most competitive rate. Also, it is important to check whether one is being offered fixed or floating interest rates. For fixed interest rates, there is no effect due to market fluctuations whereas for floating rates, market conditions affect the rate of interest.

Loan Processing Fees

The bank or financial institution charges an amount for processing any loan request, which is nothing but the loan processing fee. The processing fee that needs to be paid is calculated as a percentage of the loan amount, typically 0.25%-2% of the loan amount is charged. Lenders also set terms and conditions pertaining to prepayment of the loan. Hence, it is important to have a talk with the bank representatives before taking home loan regarding the additional charges, as these play an important role at a later stage.

Change in rates

The Reserve Bank of India changes the loan repayment policies once in a while to provide benefits to the applicants. One must check how often and quickly does the finance company incorporate these policy changes.

Application Documents

As per the standard procedure, finance companies require supporting documents for age, address and income proof. However, apart from the regular KYC requirements, one must also pay attention towards any additional documents required to complete the process.

EMI payment procedure

The method of payment, such as online payment, post-dated cheques, and the like must be checked along side the penalty amount that one needs to pay, in case the EMI is paid on the pre-fixed date.