How to choose the right home finance company?

Owing to the rising prices of property, availing a home loan is one of the crucial steps when you plan to build your dream home. A lot of comparative analysis goes around when you consider factors governing the decision to choose the right bank or financial institution.

While you finalise a residential property and search for a lender to back your purchase, it is equally important to have a clear picture of your financial state in your mind. Your CIBIL score undeniably plays a significant role in your loan approval. In case you find that, your cibil score is low; the first step would be to search for a home finance company that offers home loan despite poor credit history.

While there is no denying the fact that you should compare the deals by different lenders before making the decision, there are several other aspects you need to keep in mind.

Loan Amount: With robust credit score you can avail loan for up to 85 percent of the property cost. The lender would consider your disposable income, property value, age, occupation, credit history, and number of dependants before finalising the loan amount. The more the lender approves, the lesser would be your down payment, but it would attract a higher EMI. If higher EMI is not a concern and you do not want to spend too much from your pocket as down payment; choose the lender that approves a higher loan amount.

Rate of Interest: Home loan interest rate is something that would influence your monthly instalments. Conduct a methodical online survey for rates and select the most competitive one. Have a proper understanding of the Retail Prime Lending Rate (RPLR) before sealing the deal. For banks, the lending is higher than or at the base rate as they cannot lend lower than the base rate. The housing finance companies give a discount on the RPLR. Understand it carefully and pick the right lender.

Consider the hidden costs: Most of the times applicants overlook the hidden costs like processing charges, document charges, administrative fees, repayment charges, switch fees and verification charges. It is important to collect all information about the charges before choosing the HFC.

Property type and location: There are HFCs that do not fund in specific localities and they even do not fund every property type. Confirm if the lender you finalize authorises loan in the locality of your choice.

Loan span: To increase your eligibility, banks offer home loans for up to 30 years. Housing Finance Companies generally do not grant a 30yrs loan.  Confirm the loan span while applying.

Disbursal & Processing Speed: It is important that you choose a Housing Finance Company which rule out the possibilities of delays when it comes to approving a home loan application. With right documents and verification reports, it should not take more than 10 working days to process the home loan application. An additional 3 working days generally for the disbursal of the sanctioned amount.

Reliability of the HFC: Home Loan is a long term commitment. Furthermore, you have your title deed mortgaged with the lender. It is, therefore, exceedingly essential that you choose a reliable lender. Reliable HFCs would always offer good customer support and flexibility. Confirm the dependability of the financial institution if you do not have a preceding relationship with the organization.

Credit history and records

It would be to some extent difficult to get hold of a housing loan in case your credit history is not up to the mark. Searching loan for low Cibil score is always a challenge. However, all doors are not closed. There are few housing finance companies that agree to offer housing loans despite your poor credit record. If you have a poor score first try to improve it so that it doesn’t affect the interest rate. Banks are too demanding in authorizing housing loan to an individual with poor credit history. The loan for low Cibil score not only attracts high interest rates but lenders put restrictions on loan period and guarantors.

You are recommended to go through all these aspects and keep these pointers in mind as you move forward to choose the best lender for your home loan. Do not hurry things up. Remember repaying a housing loan is a big liability and you should do your homework carefully beforehand to keep away from future hassles.

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