6 Important Points for Choosing Home Loan

Thanks to the tax benefits for the average consumer, this year’s budget seems to make people happy. People who wanted to get home loans are pretty happy and investors are satisfied as well. The conditions are lucrative for everyone but not every person knows how to take advantage of this. You have to find out the best finance company for housing loans so that you can get the cheapest home loans.

Since tax savings are pretty high at the moment, this is the time when you need to act. There are certain things that are a part of a good Housing Finance Company (HFC) and must be considered before you take a loan. The following points would be helpful –

1. Interest Rates – Obviously, the most important point and the primary concern of all borrowers. If you see the rates on the paper, they are almost the same for all finance companies. However, what you don’t know is that negotiation and bargaining takes place which can lower your interest rate by almost 0.25 to 0.5%. This might seem small as a standalone figure but when you consider its implication on the huge loan you would be taking, it is pretty important. So don’t hesitate to compare. And look overseas to make yourself feel better about US rates, for example HSBC Australia.

It is easy to negotiate interest rates if the HFC finds your profile to be attractive and a perfect match with their desired profile. So, don’t hesitate to negotiate.

2. Service After Sales – Gone are the days when after sales services were only associated with products. Now, even HFCs offer them and they become an important point while choosing the right HFC. The after sales services will play a role when all your post-dated cheques (PDCs) get cleared.

The things to note are the timely and efficient manner in which the service is provided. The promptness and timing of the reminders plays an important part of an effective after sales service.

3. Foreclosure – Most salaried people have salary revisions every year which increases their loan paying capacity. Thus, foreclosures happen. This means that as the loan period progresses, they are in a better position to pay higher EMIs. Also, most bonus payments go towards the loan as well. Now, if you foresee such an event in your profession or job, then your aim should be to go for an HFC that doesn’t charge you for foreclosure and prepayments.

4. Research – It is necessary that you do your homework well. Never underestimate the power of a thorough research and don’t trust great brand names blindly. Choose a name that caters to your needs and requirements and not one that others prefer. Take first hand feedback from people who have taken the role from a particular HFC and find out about the things and services offered.

Simple things like calculation basis of loan amount affect your loan a lot. Some banks use net salary and others use gross. This simple step can change the final amount of the EMI. Always take care of the small points and the big ones will take care of themselves.