5 Tips to Pick a Suitable Home Loan Bank

Owning a home is one of the most important milestones to achieve for young professionals today. There is no need to worry even if you cannot afford your dream home right away?

Home loans offer a great solution. You don’t need to wait till you have saved all the funds required to buy a house of your own.

Home Loan

Wondering how to choose the right home loan? The decision really entails choosing the right bank. So, here are five tips to help you make the best decision.

The Rate of Interest and Loan Amount

The most important factor to consider while looking for any loan is the rate of interest. This represents the cost of borrowing money. Before you begin the home loan process, compare interest rates mentioned by different banks. Remember that the interest rate will differ depending on the tenure (period for which the loan is taken) and the amount you wish to borrow.

Some banks have a loan tenure of up to 30 years, giving you ample time to repay. The loan amount will be determined by the cost of the property you intend to buy and the amount of funds that you can pay towards this. A higher down payment made by you brings down the total interest. However, if you do not have enough funds, choose a bank that offers up to 90% financing.

Eligibility Criteria and Loan Amount

The next step is to check the home loan eligibility criteria of different banks. Such criteria may include your age, monthly income, financial status, credit history, credit score, and whether you have other financial obligations.

Documentation Process

Some banks have a complex documentation process. It is a good idea to choose a bank that offers a completely digitized home loan process. Check the list of home loan documents needed, which may include:

  • PAN card or form 60
  • A photo identity proof (like valid passport, voter’s ID card, driving license, Aadhar card, etc.)
  • A proof of address (any of the above can also serve for this purpose)
  • Income proof (like salary slips and ITR for salaried individuals)
  • Property proof (like photocopy of draft sale deed and chain title documents, etc.)

Keep the home loan documents handy before making an online application.

Prepayment Facility

Check whether the bank allows prepayment. This is important because you may have funds in the future and a prepayment can help you reduce your interest burden. Choose a bank that offers as much as 40% prepayment. You can also use an online part-payment calculator to know how much interest can be reduced with this option.

Loan Processing Time

Finally, enquire about the home loan processing time. Choose a bank with a shorter disbursal period, superior customer service and a good reputation.

Apart from these five critical points, remember to find out about all the fees and charges. It is best to choose a bank that maintains complete transparency and offers a digitized experience for your utmost convenience. With these facilities, buying your dream house can be a pleasant experience.

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