How to choose a bank for a mortgage loan?
NEW DELHI: The biggest and most important financial decision of your life is to buy your own home. Once you have finished the home you want to buy, the next important step is to identify the bank that will grant you the loan for your purchase. Eligibility criteria, interest rates, processing fee and other factors should be taken into account when choosing a bank for a mortgage loan .
You can start the search for a bank that can provide you best mortgage loan by considering the following important factors:
Loan amount and eligibility: It is the monthly income of an individual based on what loan amount is decided. In addition, the loan amount is decided based on the value of the property. The amount of the loan granted is 80% - 90% of the value of the property.
The interest rate: The EMI and interest outflow depends upon the rate of interest on the mortgage loan . Research in the market before you finalize the bank from which you take the loan. Try to get the lowest interest rate on the loan. You must also decide that the loan you opt for would be with a fixed rate of interest or floating rate of interest.
If interest rates fall, then you should go with a floating rate, while if interest rates increase, then you must choose the fixed interest rate.
Processing fee and prepaid conditions : When you apply for a loan, the bank charges you an amount to manage your loan application. The processing fee can be charged between 0.25% - 2% of the total loan amount. It is important that you choose a bank that offers the lowest processing fee for your loan.
Revisions in the loan rate: Always keep a check in your bank if the change in the interest rate is implemented or not. This change in the interest rate is made by the Reserve Bank of India. Those who have opted for the variable interest rate should choose the banks that change the rates as soon as the policy reviews are announced.
Documentation process: There are certain banks that process your loan application with less documentation work. Banks require proof of age, proof of identity and proof of income for the loan application.
Response time: Always choose a bank that takes less time to process and disburse a mortgage loan . The bank that has a good reputation with respect to turnaround time and good customer service after the loan is disbursed must be opted.
So always research well before choosing the loan that suits you.
Here are some of the most common questions asked about mortgage loan :
- Can I get 100% mortgage loan ?
As per the guidelines of the Reserve Bank of India, no lender is permitted offer 100% mortgage loan .
- What documents are required to apply for a mortgage loan ?
- Completed mortgage loan application form
- Proof of identity
- Proof of age
- Proof of address
- Documents related to income
- Property Documents
- Passport size photographs
- What is the criteria to get a mortgage loan ?
To get a mortgage loan , the applicant should be either a salaried or self-employed. Moreover, the maximum loan amount would not exceed 80% of the market value of the property.
- Is a mortgage loan eligible for tax deduction?
Yes, a mortgage loan is eligible for a tax deduction.