Wednesday, 19 March 2014


Choosing home loan lender is a difficult task.In this competitive and aggressive home loan market, companies are all set to give you a rosy picture. Let’s see the parameters which influences in deciding your home loan lender.

Personal Relations
It is not personalised services but personal relations you have with your lender.After all, in long period of loan repayment say 15 years, you may default any EMI due to illness or social commitment or job shifting. Your financer just waiting for a chance to slap fines, interest, legal notice charges, late payment charges, and compound interest on defaulting period besides harassing with its recovering agents.

Thus giving you mental agony and force you to take extreme steps to repay it at once.Normally,it is advisable to take loan from your banker who knows you for years and some times co-operate while giving you extra time, with any obligation, to pay due EMI.Yours bankers, specially with conservative approach will give you best figure which you can repay easily.Aggressive banks will tempt you to take big loan which are not within your reach to repay in future.

Interest Rates
Often floating rates and fixed rates are taken into account while taking home loans.To take maximum advantage, you take floating rates, expecting to go further down.Which bank announce and notified that you have been charged less from this month onwards and now your new EMI is less because of floating rates have decreased?The probability of interest rates may go up since RBI and finance ministry have cautioned banks for increasing NPA, hence banks have increased their basis points on all interest schemes.

Now even fixed rates have increased because of the notification besides floating rates.  Fixed rates are easy to calculate the EMI for entire period of loan.  When the rates are falling it is advisable to go for floating  interest rate but fixed rates are always better to make a commitment from your lender for entire loan period.

If you are in negative list
Some of the home loan financers have undeclared rule for disbursement.They do not finance film artist,TV artist,police, journalist,politician their own employees, self employed who do not have bank statements or any person which they feel that he can influence his position to not to repay the loan.They will entertain you and take all the papers and administrative fees and will give a stupid reason for regret.So it is better you approach banks who have no income proof scheme or no guarantor scheme.

Elephant tusk
Many home loan financers will advertise for less interest rates, but when you approach them they will ask for more interest rates giving reason that you have weak income generation plan.And there is high level risk if they finance you.

Some of the financers have their own model set of documents which they want you to fulfill.For example, NOC from society.Often society refuses to give one sided NOCs drafted by so called learned advocates, who wants nothing but everything standing on the society’s land.Leave the financer immediately because it will never finance you without the papers.Check their list of documentation before you pay the processing fee or administration fees.

How far DSAs are responsible
DSAs are responsible till they give you cheque from their principles.After that they simply forget you since their role is over after handling you over the loan amount.They are just agents who want to solicit business and make every attempt to satisfy their principle company.After sales service cannot be expected from DSAs.  It is just you and your financer, then.

Specific requirements
If you want to purchase property from your relatives or purchase rights of your co-successor then it is very difficult to make financer understand the need.Often, businessmen mortgage the property and take business loans to pay their commitments.Home extension and improvement loans also require same type of documentation with higher interest rates.

Past record of the financers
You must have read about the re-possession of vehicles or credit card recovery by some of the banks employing notorious elements for the purposes.The management is the same for all types of loans.The  policy of the financers and goodwill among the borrowers must be rated before you shake hands for a long period of loan.

Early repayment
If you are paying early or shifting to another structure of low interest rates or just shifting your loan borrower itself then there are charges levied by the lenders.It goes up to 5% of the loan amount.Shifting of loans from one lender to another also is very cumbersome process.Your old lender will never want you to leave hence delay tactic will be applied to give back your documents or missing important documents from the file.

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