I have made some research on best deals on Home loans which I thought would share it with you all.
Some of the facts are. Based on your salary you are entitled to get around 75% of the property value and some even give upto 95%
The Project has to get approved by Bank’s legal department
If Bank’s legal department approves the Project, it does not mean that the all Documents related to the property are in order. You have to carefully evaluate with your lawyer whether builder has got all clearances including last 30 years encumbrance certificates and various sale deeds Please do not mind spending a few thousand rupees for doing this as in most cases one realizes later that builder does not have relevant clearances.
Presently the interest rates vary from 9.75 to 11% depending on the Bank you choose. Always ask the Bank what is the Prime Lending Rate( PLR), because the interest rates vary according to the PLR.
It is generally preferable to go for floating rates( according to me) even though there are n number of debates. Some even advice combo.
The lower interest rates are generally given by nationalized banks but in most of the cases you will have to go to them and fulfill a number of formalities which may not be to everyone’s liking. But that is what you pay for getting something better on the long run.The multinationals offer higher interest rates but they come to your place at any time of the day and would help you complete all the formalities.
Please enquire what are the other charges such as processing fees, registration fees, legal charges valuation fees etc. These are flexible and depending on your bargaining capacity some of the charges can be waived off or substantially reduced. Some nationalized banks charge advocate fees for registration which they don’t tell you upfront but you will have to shell out a good 8 to 10k depending on the place.
Also enquire from the Banks whether they levy any penal interest for pre-payment charges. Some of the banks don’t allow you to pay more( in case you are able to pay) because they lose their interest. Most importantly many banks don’t allow pre-closure( at least for a period of 5 years depending on your loan tenure) and if you insist on a pre-closure you will be levied an additional interest of 0.5 to 1% depending on the amount. This should be clarified & should be negotiated right at the beginning, having the prepayment option open without having to pay additional interest.
The bank will keep your Original documents during the tenure of the loan, please keep a note in your diary as to where the bank would store your documents as on a later date if you land into any dispute you can directly reach the place and talk to concerned people. Please insist on a photo-copy of all original documents bank is keeping as you can crosscheck on a later date.
Some of the Banks offer house insurance free for a period of 3 years.
You will be advised to issue post dated checks for 12 to 24 months in advance and hence you should ensure money is available in your account and if one cheque bounces they will make your life miserable and you will have to run from pillar to post to set it right
Also during tenure of the loan, try not to change your bank account as today many banks offer at par cheque facility if you maintain a minimum balance & hence you need not worry even if you are transferred from one place to other.
Try your best to repay the loan at the same branch/region of the Bank you availed the loan .Even though Banks would tell you that you can pay the loans anywhere in the country, there are times when you ask for your original documents after 10 years, they would say they haven’t received your cheque of prior period.
Ask the banks to give you a complete chart of payments as your principal & interest amounts get IT Benefit under separate heads, interest amount drops as the year progresses.
And finally I am not a legal expert but posting this review purely based on my experience
Moral of the story - You can negotiate the interest rates depending on your repayment capacity and also if you are working for a large reputed organizations. You can negotiate processing fees, legal fees etc. And ask them to let you know all applicable charges which they normally don’t tell you unless you ask for, the logic being if you are purchasing a property for Rs 40 lacs, you would’t mind shelling out 40k ….
Happy home hunting with interest….