What One Should Consider More Than Interest Rate Before Selecting a Home Loan Lender – Explained!

While applying for home loans, some borrowers solely focus on getting a low interest rate. Now, this is understandable considering the fact that even a slight change in the home loan interest rates can result in significant changes in repaying the monthly instalments. However, focusing on the interest rate is only one aspect of getting a good loan deal.

In order to ensure that you have a home loan plan, which is suitable, many factors need to be kept in mind. Simply looking for a lender that offers the lowest home loan interest rates and as a result, missing out on other important factors could also result in challenges when it comes to clearing the loan.

So, take a look at 5 important factors to keep in mind while choosing a good lender:

• Inquire about the processing fees

It is quite common for lenders to charge a certain fee for processing loan applications. This fee can range anywhere between 0.25% to 2% of the total loan amount. Many borrowers make the mistake of thinking the only loan expense that they have to incur is the EMI payments. It is advisable to check with the lender regarding the processing fees beforehand.

• Make sure about the lender’s documentation requirements

Any lender would require certain documents from the applicant in order to provide them with a home loan. These basic documents are meant for proof of age, identity, as well as income. However, the documentation requirements of one lender might not necessarily be the same for another. This is why it is better to check with the lender regarding their documentation requirements, as this process can get quite time-consuming.

• Ask the lender about its turnaround time

For those who are unfamiliar with the term ‘turnaround time’, it is the time taken by a financial institution to process the loan application and disburse the loan amount. You might face a scenario where the home loan amount is needed urgently. In such cases, it is best to opt for a lender who has a good reputation for having a quick turnaround time.

• Check about the loan amount you are eligible for

Lastly, it is very important to find out about your home loan eligibility. Knowing the loan amount that a lender would be prepared to give you will help in deciding whether a certain property is affordable or not. Make use of a home loan eligibility calculator, which will help you understand the loan amount you can receive from the lender based on their eligibility criteria.

These are basic inquiries that any borrower should be making with lenders while looking for a home loan. Now, for borrowers who have already taken a loan but now find other lenders offering better terms, this does not mean that you are stuck with a bad loan plan. If you find a better loan plan, there is always an option of going for a home loan refinance. This means your outstanding loan debt will be transferred to the new lender with revised repayment terms.