Taking a home loan is a long term commitment for a high amount of money which necessitates that the customer does a proper research prior to taking the loan. There are several issues which must be addressed and points that must be borne in mind while taking a home loan. It is in the best interest of the customer that the fine print is read and understood categorically and the intricacies of the agreement understood prior to signing it.
Some Critical Issues to be catered for
Here is a list of some critical issues that the customer will have to cater for himself as the bank may not provide adequate information or guidance for the same:
- In India the cost of the property is invariably more than the stated amount. The unaccounted portion of the cost will have to be borne directly by the buyer as no bank will ever finance that portion of the cost of the property.
- Different banks provide different interest rates and repayment options. There is a huge discretionary power in the hands of the local branch managers who can make a real difference to actual cost the customer bears for a home loan. Negotiating and bargaining with the branch manager will be helpful in getting a good deal for yourself. So one must approach as many lenders as possible before deciding.
- There are some projects and properties which are pre approved by the lending institutions. Buying such a property is a smarter move as the banks would have carried out complete check of all legalities involved. Additionally when applying for loans on pre approved properties the processing time reduces as the bank has already carried out the legal and technical valuations of the property.
Points to be borne in mind while taking a home loan
Apart from the critical issues discussed above there are a few points which the customer must keep in the back of the mind while taking a home loan as these aspects will have effect in the long run.
- The rates of the floating interest home loans may increase at a subsequent stage which will have implications on the EMI required to be paid.
- Even the fixed rate interest may also change at a later stage having a similar impact on the EMI.
- The earnings of the customer may change at a later stage which will impact the repaying capacity of the individual. Even one of the spouses may stop earning at a later stage which will increase the burden of the home loan repayment.
- The tax benefits provided by the income tax department may be altered subsequently as per government policies.
- There may be intervening increase in expenditure which may affect the repayment capacity of the borrower.
These kinds of factors unless catered for may end creating significant problems at a later stage. One may even seek counseling from a suitable financial advisor before committing to home loan so as to remain on safe and prepared.