Home Loans

The Best Lenders and Ev­ery­thing Else

Consumer Voice - - Front Page -

A home loan bor­rower reached the con­sumer fo­rum with an in­trigu­ing com­plaint. He in­formed the fo­rum that he took a loan of Rs 20.40 lakh and had been re­li­giously pay­ing Rs 20,000 monthly in­stal­ments for two years. The bor­rower com­plained that even after two years the out­stand­ing loan was Rs 20.20 lakh and he was con­vinced that he had been cheated by the bank.

Such cases are quite common in con­sumer fo­rums. There are cases wherein con­sumers are ei­ther mis­led or mis­treated by the banks. How­ever, most com­plaints are filed by con­sumers who do not fully un­der­stand the loan terms and have no idea about how the loan works – cases of sheer lack of aware­ness.

In or­der to em­power loan seek­ers to make in­formed choices, Con­sumer Voice col­lated and stud­ied all im­por­tant el­e­ments that a home loan seeker must know be­fore ap­proach­ing the bank.

Choos­ing Your Lender – Tough Decision to Make

See­ing the ever-es­ca­lat­ing real es­tate prices, buy­ing a home is like a dream for the common man. The only op­tion for those who can af­ford a monthly in­stal­ment and about 20 per cent as down pay­ment is to take a loan.

The fore­most thing be­fore ze­ro­ing in on a lender is to com­pare the in­ter­est rate – the lower the rate, the bet­ter the deal. At the same time, there are other pa­ram­e­ters that can tilt the scale in favour of another lender of­fer­ing an im­proved loan prod­uct or en­sur­ing quick and ded­i­cated post-sales ser­vice.

Bor­rower should opt for fixed in­ter­est rates only if she/he is cer­tain that the rate of in­ter­est is the low­est in the

in­ter­est cy­cle.

Fixed or Float­ing In­ter­est Rate?

It is just not about the low in­ter­est rate, but also about know­ing if the rate is fixed or float­ing. While you are go­ing to take a home loan, you need to de­cide the type of in­ter­est rate you want to pay to the bank. There are very few lenders in In­dia who of­fer pure fixed rates where the rate of in­ter­est should re­main con­stant for the en­tire ten­ure of the home loan. At present, most lenders have a re­set clause of three to five years. In float­ing home loan, the rate of in­ter­est is sub­ject to change when­ever there are changes in the repo rates an­nounced by RBI or any changes in base rate (BR) of the bank. Bor­rower should opt for fixed in­ter­est rates only if she/he is cer­tain that the rate of in­ter­est is the low­est in the in­ter­est cy­cle.

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