Home Loan: Choosing the Right Bank - Home Loan Blog - Tata Capital

Home Loan: Choosing the Right Bank

May 16, 2017

Once you have decided to invest in a house, the foremost thing that comes in your mind is the procurement of a safe and cheap home loan. These days, home loan approval is not a herculean task provided you have the right set of required documents. You can even apply online for home loans, these days. Comparing home loan interests is not the only parameter. Almost all banks throw attractive and eye- catching home loan advertisements in various modes of online and offline media. However, to save yourself from getting trapped in their wordy circles and to pick the right bank for your home loan, sincere and thorough research is required.

  • A reputed name
    It is advisable to take a loan from a reliable and reputed name. A reputed bank will be willing to give its customers the much needed flexibility in terms of repaying the debt. Usually, the terms and conditions of such banks are more clear and transparent.
  • Loan Amount and Tenure
    Your loan amount will depend on your monthly income and the price of the property you are planning to buy. On an average, banks give around 80- 85 percent of the property value. In some cases, it can go up to 90 percent as well (per RBI notification on a loan of 30 Lakh or less). So, you need to look out for the bank that promises to give you more. However, it should always be kept in mind that a big loan amount will result in a small down payment but heavy EMIs. Your loan sanction will also depend on your monthly salary, other liabilities, assets, the number of dependents, disposables, etc.
  • Interest Rates
    This is the most important parameter while deciding upon the best lender for your home loan. You can compare the interest rates of the leading lenders online and take a note. Another important factor is whether the lender provides floating or fixed rate of interest. It is always advisable to go with the one that provides floating interest for the longer tenure home loans as they keep changing with the market conditions. Though, fixed rate of interest is always 25 -100 basis points higher than the floating rate, it works best for the short term loans. Another option is opting for a hybrid loan which allows you to choose between the fixed and floating type of loan interests.
  • Processing and Disbursal Speed
    The entire process of home loan requires a lot of ground work, time and energy. Therefore, a lender that has troublesome and lengthy process will only cause discomfort to you. Wisely choose a lender which promises to keep the time frame short and avoid delay in the final disbursement, if any. Typically, the approval process should take 10- 15 days and loan amount disbursement in the following 2- 3 days. If your bank is taking more time than this, rethink over your preference.
  • Processing Fee
    Banks deduct a certain amount for processing the loan. This amount may range from 0.2- 2 percent of the loan amount. Plus, they also put down some conditions on the transfer of the loan amount, selling of the property and other conditions. A borrower should have the complete knowledge of such things before finalizing the lender and if there is any hidden charge associated with the approval or disbursement, valuation fee, prepayment or part payment of the loan amount.

Buying a house takes a lot of effort, and most of your hard earned money. Therefore, it is extremely essential to pick the right lender for your home and make the EMI payment process an enjoyable experience. Good Luck!