How To Choose The Best Home Loan

                            The Best Home Loan

Choosing a wrong home loan can have massive financial implications. All necessary steps should be taken to choose the best lender for your dream house.

Interest Rate

The interest rates on home loans depend on your loan payment, credit balance and loan tenure, and rates can range from 9.40% to 12% per year. Home loan interest rates can lead to a size able difference in home loans, opt for a lender offering home loan at lowest interest rates. Also keep in mind that banks follow the Marginal Cost of Funds based Lending Rate regime for interest rate. Who wish to avail home loan that they are able to get the loan at lowest interest rates and so that they can save on EMI. It is not possible to give the name of one bank which charges the lowest interest rates for all the holding of an office and all levels of loan amount. Moreover, these lowest interest rates are randomly changed by banks and that too. Some true facts from different home loan.

 Loan To Value (LTV) Ratio

Loan to Value is the direction of your property value that lenders will finance through your home loan. The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to  value of an asset purchased. The term is commonly used by banks and building societies to represent the ratio of the first mortgage line as a percentage of the total appraised value of real property.

Credit History

A low credit balance may reduce your chances of securing a home loan from a public financial bank or may lead to higher rates. However, housing finance companies take a more relaxed position on your credit balance. The flip side is that they may offer you lower Loan-to Value ratio and charge higher rates.

Loan Tenure

Generally, most banks and NBFCs offer loan tenure of up to 30 years. However, some like LIC Housing Finance have lower tenures for self-employed people (only 20 years) while others like ICICI Housing Finance has a maximum tenure of 20 years for all customer segments. Choose a lender offering longest loan tenure if reduced EMI payouts increases your loan eligibility.

Loan Processing Time

The time taken for approval and amount of home loans varies across lenders. Choose a lender on the basis of the emergency of your home loan funds. Opt for one that has faster loan processing system in case you have an immediate loan requirement.

Processing Fee

Lenders charge processing fee to cover various request incurred while assessing your home loan application. While many lenders charge a fixed processing amount most charge 0.50–1.50% of the total loan amount. As this is a non-refundable charge irrespective of final sanction of the loan, opt for a lender that charges the lowest. The other major charges that need to be considered include prepayment penalty (only applicable in case of fixed interest loans), late payment amount, CERSAI charge and switching amount. Compare these charges across lenders as these may add up to 4% of your loan amount.