You are all set to purchase or construct the house of your dreams. And you have decided to avail a home loan.
In India, availing of a home or housing loan at an attractive interest rate is the easiest way to fund one’s housing dream. However, choosing the right lender can be challenging. You need to consider multiple factors, including loan amount, eligibility, interest rate, reputation, and service, among other factors.
This article contains the information you need to choose the right lender without any hassle.
Six Factors to Consider When Choosing a Housing Loan
A home loan is usually a long-term loan. You need to spend considerable time analyzing your requirement to avoid any hassle later. When you are sure about your needs, exploring options become easier for you. The following are the top-6 factors you may consider for choosing the best housing loan lender.
- Check the Interest Rate
Home loan interest rate is typically much lower than other loans in India. However, if you make the interest rate the only parameter, you may overlook additional charges. Lenders sometimes keep the interest rates lower, only to charge a higher processing fee. In some cases, the processing fee may be as high as 2% of the loan amount. Hence, before choosing the best lender, you should look at the charges associated with the housing loan and choose a lender that offers lower rates and charges a minimal processing fee.
Does Credit Score Matter?
The credit score is a key factor that determines the housing loan interest rate. Some lenders give more weightage to the credit score than other parameters. You can get better rates from such a lender if your credit score is high. For instance, PNB Housing Finance offers the lowest rates to borrowers with a credit score above 800. Hence, you can save extra bucks every month if your credit score is high and you select a lender who lays more emphasis on the borrower’s credit score.
- The Reaction to Rate Change
The home loan floating interest rate in India depends on the RBI-set REPO rate. When the RBI increases the REPO rate, lenders quickly increase the housing loan interest rate. However, when the RBI decreases the rate, they often go into procrastination mode. Hence, before choosing the best lender, you need to observe their reaction to rate change. Choose the lender who passes on the benefit to the borrower as soon as the RBI revises the interest rate.
- Evaluate the Lender and Developer’s Financial Track Record
Home loan interest rate in India also depends on the lender’s reputation and the developer’s credibility. PNB Housing Finance, for instance, has a strong brand presence, a legacy of thirty years, and robust financials. If your lender is not as stable as PNB Housing, you should cautiously inspect the company’s financials and make a decision. Similarly, you should select a reputed developer who maintains a relationship with the lender, which may help you get a better deal.
- Value-Added Benefits
Choose a lender who offers various value-added benefits and accessible services to the borrowers. Some lenders provide a doorstep service facility, where you do not need to visit the lender’s office to apply for a housing loan. You can conveniently open the website and place a request. The lender sends a loan officer to your registered address who guides you with the account opening process.
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Conclusion
The best housing loan lender has transparent policies and unambiguous terms. Although getting the lowest home loan interest rate in India should be your priority, you also need to consider other factors, such as the lender’s reputation, loan terms, and application process, while choosing the lender.
