Prepare checklist before finalizing bank for home loan

Generally,in order to buy a house we take home loan from banks and 70-80 percent we get from banks and rest is financed out of our own resources. Here we will discuss some factors which should be taken into consideration before taking a final decision from whom to borrow and how much to borrow.

First you should prepare a checklist covering specific areas which can be prepared while discussing with a prospective lender. This helps in making a comparison and take a final decision.

The points to be covered in checklist:

Purposes for taking the loan – to purchase plot, for construction or for both. Then how and when will the bank give the loan amount. Documents required for getting loan, Eligibility to be a co-applicant. How much time bank will take to disburse the loan amount?

Usually bank takes 7-10 working days to disburse loan amount. Then you must know when EMIs start, method of implementing interest rate change - reduction/increase in tenure or EMI Method of calculating interest rate. Guarantor requirement, phases of the loan disbursement, legal and verification fees payable by the borrower, rate of interest and effective rate of interest. The effective interest rate will help in making comparison.

Then there are commitment charges payables, if any processing charges payable by the borrower, procedure for switching over from floating to fixed rate or vice versa. The terms and conditions related to charges payable.

In case of purchase of land and construction loan, you must check whether bank will sanction separate loans or a composite loan. Also monthly EMI amount, mode of payment of EMIs direct transfer from bank account, postdated cheques or debit from salary, offer of a free or concessional insurance policy for the loan, house or against personal accident Impact of part prepayment on EMI - reduction of EMI amount or reduced number of EMIs.

These factors will help in preparing preliminary checklist only there are many more factors. Thus, this will help you in comparing and negotiating with banks for a good deal.