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Factors To Look For Before Choosing a Home Loan

By Finserv MARKETS - Jan 30,2019
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How to choose a Home Loan

Which of the two is the most economically feasible option – renting or buying a property? Most would agree that buying is a better option. The many advantages that come with owning a house simply cannot be stressed upon. Purchasing a home is not only a sound investment but also a lucrative long-term solution. You can be the proud owner of a property whose value is bound to increase. Most would agree that it’s always better to take a prudent approach instead of resorting to quick fixes in the context of real estate.

There are many options in the market with regards to home loans. Hence, it’s important to consider a plethora of factors before taking any important financial decision. Choosing the right financier/lender for your home loan can be quite a tricky affair. Therefore, referring to blogs like this one will provide you with crucial information and vital insights. Consider the following factors mentioned below before applying for your home loan.

Compare different plans

Your choices, needs and housing requirements will be unique. Hence, it is critical that you obtain all the relevant information which, is essential for making the right choice. The best way to do this is by asking various lenders for a fact sheet. This will make it easier for you to compare the different features and charges.

Some of the key factors to consider include:

  • Interest Rate: Variable / Floating, Fixed or Split rate of interest
  • Portability
  • Loan Types: Bridging loan, Construction loan etc
  • Processing Charges and Prepayment

What is the meaning of fixed, variable and split rate home loans?

  • Variable / Floating interest rate: This is determined by the official cash rate and is prone to fluctuations due to dynamic market conditions.
  • Fixed interest rate: As the name suggests, your interest rate will be constant for a fixed period (usually 2-5 years) during the tenure/duration of your home loan.
  • Split loan: This is a hybrid between a variable interest rate and a fixed rate of interest.

Portability

This essentially means the freedom to transfer your loan across different properties. This creates a win-win situation for both the lender and the customer. It’ll help you avoid application fees and the interest rate applicable in this case would be a variable one. The sale and purchase of properties in this context should be on the same day.

What are bridging loans and construction loans?

  • Bridging loans: Bridging loans are essentially loans taken while transacting between the buying and selling of properties. It is basically meant for people purchasing a new property before selling their existing one or for properties under construction. An individual must also check for holiday periods on EMIs that is the time duration for which, you do not have to start repayment of your home loan.
  • Construction loans: If you’re planning on constructing your new house, then this loan will be extremely useful. The interest rate for this loan will be a floating rate of interest.

Processing Charges & Prepayment

A processing fee is an amount that a bank / NBFC (Non-Banking Financial Institution) charges for the processing of the loan. On top of that, certain banks / NBFCs will also include prepayment clauses in the terms and conditions document. Some banks would put a penalty charge on foreclosure/prepayment and some might not. Hence, it is advisable that you carefully review these charges and prepayment clauses before making a final decision. Finserv MARKETS don’t charge for loan pre-payment or loan foreclosure.

Some of the other factors apart from the above include: Turnaround Time i.e. the tie taken by the bank to approve and disburse your loan, Responsiveness or how quickly your responds to policy changes by RBI (Reserve bank of India) on interest rates, and Loan Amount & Eligibility (This is essentially the quantum of loan that your lender will approve and provide basis your application). Avail a Bajaj Finserv Home Loan with Finserv MARKETS’ fast online process & swift disbursal facilities.

Choosing the right provider for your home loan is of paramount importance, and Finserv MARKETS is definitely the right choice. We provide flexible repayment options, easy balance transfer facility and other solutions that can help you turn your dream of buying a house into reality. For further information, visit our website today!

Read more on tax benefits on home loan only at Finserv MARKETS.

“Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!”

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522