Loan is necessity of people to make a comfortable life. Home loan decision for people is lifetime decision therefore care must be taken in borrowing it. Banks and other financial institutes attract debtor in many ways. Presently, Home Loans are available by nationalized and private banks more easily as compared to earlier time. EMI on the home loans is reduced than before and the loan refund time frame is increased than before. It is advised to People who are in need of loan for car, home or for any other purposes that they should be careful and take safety measures when dealing with third party agents who act as intermediaries between them and the lending institutes.
Person who want home loan must do extensive research for banks or other financial institutes who offer bank loan. It is advisable to follow what agents says.
When taking home loans and decide the bank or financial institute, applicants must read terms and conditions thoroughly. It is important to check that if there is any hidden charge on the loan.
Home loan borrower also check the lowest interest rate available in the market normally the interest rates are more or less fixed, but it differs from bank to bank. As the 1% change is also a big matter.
For home loan, EMI (Equated Monthly Instalments) generally charged 40% of the net disposal income as per the rule. EMI is the repayment that borrower makes to his lender every month. It is an unequal combination of his principal repayment and interest payments. According to the thumb rule, EMI should not exceed more than 30% of borrower’s total income, considering other liabilities. To arrive at EMI, bank will consider several parameters.
1.Principal amount
2.Repayment period
3.Rate of interest
EMI payments start once the loan has been fully disbursed. A break up of borrower EMIs over the entire loan term can be found in amortization schedule. It is important to go over amortization schedule regularly to keep a track of any changes in interest rate or loan tenure made by the bank.
As the future is uncertain therefore it is better to reduce the EMI to 15% of the disposable income, and save the certain amount as reserve.
People who are interested in home loan must ask the bank executive who is dealing with for proof of his/her identity. This is just to make sure that customer is dealing with the right person to whom they are going to submit sensitive and important financial details.
Another important factor in home loan process is that person must keep all documents with attested photocopies ready.
Currently, according to government norms, all banks ask for borrower’s financial and KYC (know your customer) document photocopies self-attested by applicant and co-applicant.
In the process of home loan, borrowers must make sure that they sign every photocopied page before they attach it to their application.
Applicant’s signature on all photocopied pages is required to ensure that they have seen the document that have been submitted for home loan processing.
For home loan borrowing, it is important to check the Most Important Information note before signing loan document. Most important note (MII) is generally available with all banks’ loan documents or application which comes to you. It is essential to read to just know if there are any additional charges.
Applicants of home loan must also check all the filled-in- details with care before finally handing over their application to the bank executive. Re-checking details will confirm that the application form is duly filled up. It is important that the customer fills the application form and it is sincere advice that they must not just sign an empty form and give it to the executive to fill it.
It is highly recommended in home borrowing process that applicants must not give original documents to the bank executive who is dealing home loan process. If at all any original document has to be submitted then applicants must avoid giving it to the bank executive/agent. It will be better to go to the bank and submit it to the concerned authority in the bank or financial institution.
If applicants of home loan issue any cheque for charges or fees, remember to issue them in favour of their bank, and not any individual of bank executive, or agent. It is important to inform every applicant or home loan borrower that bank charges and fees must be always paid by cheque as no bank accepts cash or any other method of payment. While making the cheque just ensure it is crossed and payable in the bank’s name.
After submission of documents if applicants are not sure to avail the loan, immediately inform the bank. Sometimes, after applying due to any reason if applicants decide not to go ahead with the loan then please make sure they have informed the bank in writing and take the acknowledgment of the same and collect their documents and cheque as early as possible.
Other important thing is that if applicants do not receive a reply regarding acceptance or rejection of their loan-application within the time specified, contact the bank through their Customer Care or bank branch.
It is a common practise of banks that once application form for home loan is submitted in the bank, they will call applicant or send an SMS for confirmation of the same. If applicant does not receive any of these please contact bank immediately.
It is to ensure that the title of the property to which applicant is purchasing should be precise for smooth process of home loan.