Rajiv Raj Director & Co-Founder, www.credit vidya.com
Opting for a home loan is one of the most important financial decisions you will ever make. It helps in the creation of an asset which is dearest to us - our home! So how do we ensure that we bag the best deal on home loans?
This may be a bit exaggerated but home loans are life changing. It is a long time commitment and demands planning, discipline and a change in lifestyle to suit the new financial equation after EMI payments. So before you sign up for all of that, it is indeed wise to take your time to decide. Evaluate the options available and choose the best one. And while you are at it, these points will definitely help.
Let your CIBIL score negotiate for you!
Lending is serious business and clients who have a good track record are always welcome. Banks look at the CIBIL report to evaluate potential borrowers. As soon as you decide that you would need a home loan in the near future start working on the CIBIL report. Ensure timely repayments, zero defaults and steer clear of additional credit. Clear all balance payments. And most important, ensure that the report captures and reflects the same.
Resolve those conflicts!
It is not uncommon to have pending credit issues. Especially with credit cards, there are times when both parties do not agree and the issue is pending. While the amount may be small it will still reflect on the CIBIL report. As a borrower, the issue often gets ignored after some time due to disagreement. The right thing to do is, to approach the lender and understand the problem. Lenders are willing to resolve these conflicts and close pending issues. Make sure you reach a conclusion by finding a solution to the problem. With no conflicts on the report, you can negotiate better for loan rates.
Dig deep in your own pocket!
Loans are easily available these days. The lending market is highly competitive and lenders are actively seeking good borrowers. But don't let your eligibility amount decide how much credit you want to avail. Remember that every rupee borrowed comes with an interest charge. So put those savings to good use and check with other personal sources for money. Once you have this large chunk of money, use it for down payment. This is good credit behavior. Lenders appreciate borrowers with financial discipline and may offer a better rate! Either way this will reduce your interest burden in the future.
Loans are not forever!
Deciding the tenure of the home loan is a critical point. Stretching it over decades means you are willing to carry the burden, that much longer. While reducing the tenure will result in a rise in the EMI. Prima facie this may seem hard hitting, but eventually the total interest amount you will repay over the term of the loan will be considerably lower. So basically the lowest rate does not always mean the best deal. Check on the tenure and do the math!
Shop to save
Most borrowers get into a comfort zone with their regular banker. However, to get the best deal it is important to shop around in the market. Check what other lenders have to offer and discuss the same with your bank. Most banks will match up to the offer over losing a client. Also, evaluate your home loan deal every year. If moving the loan to a new lender is going to help your financial goals, then do it!
The best deals are bagged by borrowers who are aware and smart. It's all about good credit behavior and financial discipline. Follow these points and you can be rest assured that you have good deal for yourself.