Finance

Should The Interest Rate Be The Only Criterion While Choosing a Home Loan? 

With various public and private sector banks, NBFCs and other financial institutions thronging the market, there is no dearth of conforming loan programs orange county ca. These loan providers confuse prospective borrowers with various seemingly lucrative offers. Though the interest rate gives an idea of the final outgo and the overall cost involved, it should not be the only yardstick for considering any deal economically.

A home loan is a long term financial commitment involving massive amounts, running in lakhs. You should be considering various other factors before deciding on the loan provider. 

Here are some of the points to be looked into before choosing a home loan provider.

Eligibility

Eligibility norms vary from lender to lender. But mainly, it depends on the income and the value of the property. You can consider having a co-applicant with a regular source of income to be eligible for a higher loan amount. The lender of your choice should be able to meet your entire financial requirement to avoid borrowing from various entities. If you can provide a higher margin amount, you will get the loan at a cheaper rate. 

Floating or Fixed Rate of Interest

You can avail of the home loan either at a fixed rate or a floating rate of interest. A fixed rate remains constant for a certain period. The fixed rates are reset at periodical intervals like once in 5 years or seven years. You are aware of your financial commitment for a set period with a fixed rate and can plan your budget accordingly. 

A floating rate changes as and when the interest rates change, and your EMI will vary accordingly. If the interest hike is considerable, your EMI will also go up considerably unless you switch to a longer tenure. If you have already chosen the maximum term permissible, then you will not have this option either. Then the hike will come as a shock as you will not be prepared for the additional financial burden. Though the floating rate may appear economical initially, it can shake your budget if you have not planned meticulously.

Loan Tenure

The loan may vary significantly across financial institutions. Some of the financial institutions permit a loan tenure as long as 30 years. A longer-term means a higher overall cost. If your income is not adequate to take the burden of a higher EMI, you can go in for a longer tenure. 

But if your income can accommodate a fat EMI, then it is prudent to go for a shorter tenure and avoid the overall cost and the stress of a financial burden for a more extended period.

Prepayment norms

Prepayment norms are stringent and vary across financial institutions. Some of the financial institutions do not permit prepayment of the loan as it will affect their asset-liability management. Some of them do allow prepayments to the loans, but with a cost. You should carefully choose a lender who has liberal prepayment policies. Otherwise, even you have some additional funds on hand. You will not be able to pay the loan. You will end up paying interest for the entire loan tenure. You will not be able to bring down the overall cost of your home loan if you are not allowed to make a prepayment to the loan account.

Service Features

A home loan means a long-term relationship with your loan provider. Some of the financial institutions are still following the age-old loan processing procedure. The financial institutions that have emerged lately are technically equipped, provide mobile apps, and have in-house representatives committed to customer service. In addition, some of them provide door-step service and provide IT certificates, loan related information and other essential documents at the click of a button. You should look for all these options in your lender before making a choice. In brief, choose a lender whose services are customer friendly.

Loan Features

Salaried individuals are considered low-risk borrowers and are most sought after. Financial institutions give more preference to salaried individuals as compared to non-salaried ones. But some institutions have assessed the income generation capacity of the self-employed and provide loans to both salaried and non-salaried individuals with some specifications. They even offer a top-up facility if the borrower has not availed of the entire eligible amount. 

Network of the loan provider

Availability of a home loan means a long-term association with your loan provider. There are chances that you will be changing cities during the loan tenure. You should look for a lender who can be accessed from anywhere or who has a Pan India presence. You should ensure that you can access your account from any other lender branch without any restrictions.

Safe Custody of Property Documents

Home loans are provided against the mortgage of the property for which the loan is availed. This means you will be depositing the property documents with the financial institution. The papers will be returned to you only after the entire home loan liability is cleared. The lender you choose should be reliable enough to keep the documents under safe custody for a period as long as 30 years. 

We can understand the importance of considering these important aspects with respect to Axis Bank Home Loan –  a leading bank from the private sector, which provides home loans at affordable interest rates and with very flexible features.

Here are the details on the Axis home loan

  • Rate of Interest

Axis bank home loan interest rate is linked to Repo Rate. The floating rate for salaried individuals starts at 6.90% p.a and goes up to 8.40% p.a. For the self-employed, the floating rate starts at 7.00% p.a.and goes up to 8.55% p.a. The fixed rate of interest for both salaried and self-employed individuals is 12% p.a.

  • Eligibility
    • Resident, as well as Non-Resident individuals, are eligible for Axis Home Loan
    • Confirmed employees of Government/Reputed Companies qualify for the loan.
    • Professionals like doctors, engineers, architects, advocates, chartered accountants are qualified for the loan
    • Should be over 21 years of age.
  • Processing charges

1% of the loan amount with a minimum of Rs. 10000/-