Beware before applying for LOANS. Review on Taking a Home Loan

Housing loans - Your Dream comes true", Hum Hai Na" We build home - are some of the slogan given by financial institutions for attaracting customer emotionally. But don't go with such slogan.

At the time of applying for the loans there are some points which should be keep in mind.

1. Type of loan

   
   




2. Rate of interest - Should not be as per the credit history of customer.

   
   




3. Term of loan

   
   




4. Secured/Unsecured

   
   




5. Amortisation Type - Daily/monthly/early.

   
   




6. Fixed interest rate/floating interest rate.

   
   




7. Processing Fees.

   
   




8. Any other charges - Legal/Technical/verification etc.

   
   

Today many of the finance company insist for processig fees cheques with a commitment that they are not going to deposit cheque before approval of loan.

This is not a right commitment. As per many bank/FIs it is mandatory to take processing fees at the time of signing of form or making application for finance. It may be because of delay or process of operations that the cheque gets deposits later from 5-7 days.

Everyone should first inquire about the processing fees and rate of interest to be charged on the loan applied. Whether the processing fees is on the loan amount approved or loan amount applied.

Interest rate may be floating and fixed and on daily/monthly/yearly amortisation. Everyone should first inquire about the type of loan and the method of amortisation. Daily and monthly amortisation is affordable but one should not go for annual amortisation. This will make the loan more costly.

Normally all PSU banks provide daily amortisation option and the private banks and financial institutions provide finance ie. secured loan and unsecured loan(personal loan and home loans) on monthly reducing.

Floating interest rate is more preferable when the interest are are high and fixed interest rate are more advisable when interest rate are low. At current senerio when interest rates are high one should go for floating interest rate and when the interest rates are low one should convert floating interest rate to fixed interest rate after paying conversion charges.

One should first confirm the interest rate and then sign the application form and issue processing fees cheques. Some finance co work as per the credit score model some vary thier interest rate depending the credit histroy of customers. So one should first confirm interest rate that will be applicable for thier loan.

Always confirm the charges informed by sales guys with the finance company headoffice or customer care center or Branch Managers. Sales guys sometimes charge higher then company norms to earn more incentives.

For more details and query feel free to send me mail.

Regards

Halaabol.