Home Loans

The Best Lenders and Everything Else

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.