Reports from December 2019 suggest that loan value in India has been rising at a rate of 7.10% on a year-on-year basis. The average loan growth in India from 2012 to 2019 has been 11.76%.
These data point out a vital fact about the Indian economy – a high number of individuals availing credit facilities to meet different types of financial needs.
Understandably, a housing loan comes as one of the most crucial lines of credit. While there are several financial institutions that offer such loans, it is critical for potential borrowers to understand how to choose their lender.
The different factors to check before finalizing on a housing loan lender are discussed below in detail –
- Consider the rate of interest
The rate of interest offered by different financial institutions is one of the crucial factors which decide the home loan a borrower should opt for. Applicants should check this interest rate before they go into other details like home loan eligibility criteria and document requirements. The rate of interest directly impacts the total amount of money a borrower has to spend in interest repayment.
Applicants should check the rates of interest offered by different lenders and compare them. It is advisable for them to use an online EMI calculator and check the cost of the loan as well as the EMI they will pay.
- Look for a balance transfer facility
In case an existing lender charges a high-interest rate or borrowers find it difficult to repay their debt conveniently, they can opt for the balance transfer facility. Doing so, borrowers will not only lower their debt burden but be able to repay it suitably.
Hence, opting for a lender that permits the same would prove beneficial in such circumstances. Further, to streamline the process, borrowers should make it a point to check the documents required for a home loan balance transfer.
- Check for top-up loan facilities
Choosing a lender that extends substantial top-up loan on existing home loans would come in handy in several situations. It will help borrowers meet ancillary expenses that arise during the purchase of a housing facility or while maintaining it effectively. Further, make it a point to opt for a lender that requires minimum documentation to approve it and charges a negligible rate of interest on it.
- Consider part-prepayment and foreclosure facility
Individuals should look for a lender that does not charge borrowers to make part-prepayments or foreclose the loan. This feature will not only help borrowers save on additional expenses but will make the loan relatively affordable. Consequently, it would help streamline the repayment process considerably and plan the same smartly
- Check the documentation process
Another essential criterion to select a home loan lender is the ease of application for the same. With reputed lenders, the documents required for a home loan application are minimum, which includes the following –
- Salary slips for salaried individuals.
- Bank account statements for self-employed applicants.
- KYC documents and address proofs for both salaried and self-employed individuals.
In a nutshell, selecting the right lender is essential to enjoy a wide range of benefits like flexibility in repayment and faster loan approval. Also, it is essential to calculate home loan eligibility required by a financial institution before applying.