Buying a house is the biggest decision and investment of your life. Once you have found the best home, the next step is to get a home loan. A home loan reduces your financial stress by paying the cost of your property to the seller. You can then pay the EMIs (equated monthly instalments) to the bank over the loan term.
Before you choose the best bank for a home loan, compare:
- Interest rates
- Housing loan eligibility requirements
- Processing fee and other charges
- Documents required for a home loan
- Term of the loan
Here are a few questions you must ask yourself when choosing the bank.
How Soon Can the Bank Approve Your Home Loan Application?
Banks are now accepting home loan requests online. You can submit the required documents with a home loan application form to the bank through their official website. The lenders will check and accept your request within a few days.
What are the Interest Rates?
The loan amount is paid with either a fixed or fluctuating interest every month. The interest is payable until you repay the loan amount in full. That’s why the interest rates charged by the bank matter. The home loan interest rate in India varies from bank to bank. Compare interest rates of different lenders and choose a bank that offers a home loan with the lowest interest.
What Documents are Required?
Banks in India ask you to submit ID verification, address proof, income proof and other documents that show your eligibility. Almost every bank requires the following documents for home loans.
- 1-2 passport size photos
- Bank account statement (at least three months old)
- Passport/driving license/Aadhar card/ration card, and other documents showing your address
- Property documents
- Voter ID/Passport/Aadhar card/PAN card, and any other government-issued ID verification document
- Proof of age
- Home loan application form
Attach these documents to the application form and submit them online through the bank’s website. Or, you can submit them at the nearest branch of your bank.
What is the Processing Fee and Additional Charges?
The down payment is not the only amount you pay before your home loan approval. You also pay a processing fee before the bank disburses the loan.
The processing fee includes the cost of documentation, technical assessment, and other charges. The fee is between 0.25% and 2% of the loan. Check and compare the processing fees charged by different banks. Also, check if there’s any additional cost charged upfront. Your best option is the bank that charges a low processing fee and zero hidden cost.
How Much Down Payment is Required?
The down payment is the upfront payment on a home loan. Banks can charge up to 30% of the total cost of your property to approve your home loan request. Choose a bank that requires only a small down payment (10-15 per cent of the loan amount).
Always select a trustworthy bank that charges reasonable interest, low processing fee, and offers a flexible payment plan.