How To Find the Best Home Loan Provider: Top Tips For Smart Borrowers

Our home is the most prized possession for most of us. Therefore, it’s important to find a home that fits your budget. Equally important is finding a lender who can provide the financing needed to put that home in your name.

Choosing the right home loan lender from a wide range of banks and financial institutions can be daunting. Factors such as interest rates, eligibility criteria, processing fees, and others play a key role in selecting the best home loan provider.

First, you should search for the property and verify all related documents. Then, begin your search for the right lender who can offer the best terms for your home loan.

Below is a step-by-step process to help you find the right home loan lender:

Evaluate Home Loan Offerings

As a home buyer, you need to first evaluate the various home loan offerings from different banks ranging from HDFC Bank to the State Bank of India and from ICICI Bank to Axis Bank, as well as several housing finance companies.

Loan Amount And Eligibility

The next step is to check what amount of the property value the bank is willing to provide as a loan. This might range from 75 per cent to 90 per cent, depending on the borrower’s relationship with the bank and the scheme availed.

A higher loan amount means a lower down payment, but results in a higher EMI. At the same time, banks have varied loan eligibility criteria based on factors such as the borrower’s age, job profile, employment stability, and credit history. Use loan calculators and eligibility charts to assess your qualification with different lenders and find the best offers available.

Interest Rates

The interest rates and spread of the loan vary from bank to bank, and often between schemes offered by the same bank. The spread of the loan is a key factor as it does not change over the tenor of the loan unlike the interest, which is volatile and would change at frequent intervals to reflect the change in repo rates and market conditions. So, select the lender with the lowest spread as the market forces and regulatory policies would bring the rates at par eventually, however the spread would remain constant.

Prepayment Terms And Processing Charges

Processing fee is the charge that banks deduct for processing the home loan. Lenders also set terms and conditions pertaining to the repayment of home loans. Potential borrowers must clarify the terms related to settlement/foreclosing the outstanding amount, transferring the balance to another lender’s account, prepaying a part or full amount of home loan, and other things, before finalizing a lender. Banks also charge processing and legal fees for the home loan approval and disbursal. Make sure you understand them well before applying.

Documentation

The next thing you need to consider is the documents sought by banks for the processing of home loan. Even though lenders ask for similar documents, but they can differ depending upon specific requirements.

Responsiveness To Changes In Rates

Another important thing is to judge your lender based on the rate changes with regard to policy changes by the Reserve Bank of India. For instance, if a lender is usually seen reducing rates in response to the cut in the repo rate by the RBI, then one should opt for that lender. That is because you can expect a fair deal from that lender not only for now but also in the future.

Processing And Disbursal Time

A lender that expedites any delay and is quick in processing the home loan application proves beneficial in the long run. Also, there are lots of post-disbursement services involved. These include getting interest certificate every year on time, getting a regular account statement, and many other services. Therefore, choose a lender with strong systems and a good record of after-sales service.