Have you ever been to a bank for a home loan? Do you know some of the common problems you face in such a situation? Do you know how harrowing an experience it is?
What's more, no sooner have you tackled these irritations than you are faced with the problem of how to negotiate with your lender to get the best home loan deal possible.
If you are already irritated with a barrage of such questions, help is at hand on both the fronts.
Here are some common problems faced by home loan customers along with possible ways to avoid them:
Problem 1: Desired/ promised home loan amount not available.
Solution: No real solution. All you can do is try and get a written (or even email) acknowledgement from the lender or his representative that the processing fee will be refunded if the loan amount is not as per your application.
Problem 2: Promised interest rate not available.
Solution: Same as above.
Problem 3: Non-refund of processing fee in the event of non-sanction or non-use of the sanction.
Solution: Same as above.
Problem 4: Loan amount getting restricted post sanction due to lower valuation of the property by the bank.
Solution: Try and get the bank to value the property before getting the sanction, even if it means paying a small valuation fee. This is especially important for old resale properties.
Problem 5: Non-availability of chain of title documents and/ or NOCs in the format desired by the bank or problems with any other legal/ title document.
Solution: Give copies of all property papers along with the application form so that any problems can be highlighted quickly.
Obtain copies/ formats of the NOC issued by the society/ other authority to other home loan borrowers in earlier cases and ensure that the particular format is acceptable to the bank. The society/ other authority is unlikely to change its format for your lender.
If you are sure by now on how to tackle the common problems you face while borrowing money for your home, then here's how to negotiate a good deal for your home loan:
~ Remember, all rates are negotiable. You can always play off one lender against the other to some extent.
~ Once you have reached the limit of negotiation on interest rates, you can negotiate the other charges -- especially processing fees.
~ Unless the loan amount is a constraint, approach prospective lenders only after the property is finalised and disbursement is required in the next few days. Most lenders are interested only in disbursements and reserve their best rates only for immediate disbursement cases.
~ Bundle your loan request with the loan requirements of your friends and colleagues and thus offer a larger loan portfolio to the lending bank. This can be helpful especially if the property is in the same building, since the legal and technical costs can be reduced. This can then be passed on to you as a benefit to you.
~ If the property is being bought from a reputed builder, you can also employ the month end trick by negotiating till the 23rd or 24th of the month. Every lending bank has monthly targets for its staff and, as the month end nears, the bank offers slightly better terms to enable them to fulfill their targets. However, this is unlikely to work where the property title/ valuation is not absolutely clear.
~ Give full details about your existing borrowings (including credit cards) and good repayment track record to all lenders. Remember, most banks will check with the Credit Bureau anyway to find out about your existing borrowing and repayment track record. Making full disclosure about your existing borrowings makes sense and can actually be used to reduce rates further.
By apnaloan.com, an online guide for retail loan seekers. Apnaloan also enables loan consumers get best rates by making banks compete for their loan. To find out how apnaloan.com helps consumers get the best rates on home loans, please click here.
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