Factors You Should Consider Before Choosing A Bank For Home Loan
Buying a home is a ‘once in a lifetime’ decision for many. And therefore, it becomes very essential for them to make it the best decision of their lives. Though there are many stages involved in this decision and each of them is equally important. However, one decision that defines the overall financial load that you’ll have to bear for years is the finalization of home loans.
Home loans are generally spread over 15 to 20 years. This means that any mistake in finalizing the home loan may create big troubles in the future. Well, not anymore. Here are some go-to tips before you decide your home loan.
1) Rate of Interest: Fixed/Floating Rates
The banks or NBFCs primarily offer two types of home loan rates. This includes fixed rates and floating rates. Fixed-rate, as the name suggests, are immune to any fluctuations in the market. Even if the Reserve Bank decreases or increases the home loan rates, your interest rate remains fixed for the entire tenure. Whereas, the floating rate of interest may increase or decrease as per the market developments. The experts generally advise going for fluctuating loan in a developing economy like India.
2) Interest Rate Negotiation
Every bank or NBFC has a different rate of interest depending upon their policies and RBI guidelines. It’s always recommended checking and compare before finalizing on the interest rate offered by any lender. Many times, these lenders include many hidden charges with their loans. It is important to scrutiny them and negotiate them for the best possible deal.
3) Maintaining a good CIBIL score
Every lender will value a borrower with a good CIBIL score. It actually guarantees the recovery of their funds. CIBIL score above 750 and close to 900 is considered good enough by the lenders and it becomes easy for them to sanction a loan at lesser interest rates with added benefits.
7) Changing the Lender or Balance transferring
The RBI has given this facility to the borrowers to change the bank in case they deem fit and find it beneficial. Majorly the shift is made because of the low-interest rate offered by another lender. So, before finalizing the loan, do crosscheck from the lender about the loan transfer criteria like processing fee, etc. Balance transfer of the current home loan should be performed only if there is a significant change or drop in the interest rate, not when the change is nominal or else the additional cost incurred by the borrower will compensate for the interest rate change
How good home maybe, if you have chosen a bad loan, your happiness might get ruined. So, you have to be extra cautious and have to do all the research before finalizing the home loan.