They initially give you bogus lower interest rates, to catch your attention, and will assure you that your loan will get sanctioned, so you depend on them and leave other banks(This is the bait, once taken they know your situation that the prey is in place they move I for the kill and you will fall to the next trap in no.2 below).
When loan sanction letter comes they will have increased the rates, citing’market rates have changed’, or totally deny discussing lower rates.
They will ask you to take the cheque as soon as possible or interest rates will hike.
They provide you with more required documents, so you get delayed. and more once you bring the newly required documents, especially by looking into your case and asking for what might be te hardest for you to get.
They will keep hiking the rate as time passes. and they will keep you in the dark about interest hikes so you come to a point where there is no option for you than to take the loan, now that you have been expecting it for more than a month, and even the builder is getting restless.
A simple Modus Operandi to take the customer to a point where he/she is helpless, they discussed with us an interest rate of 8.5%, in the offer letter they increased it to 8.75% and towards disbursement it was increased to 9.25% , within15-20 days, without informing or taking customer approval as they know the customer will take anything the more vulnerable he is made because of the time delay. at this point you cannot get back your processing fees and franking charges which are Rs11000(cheque)+ Rs.7500(cash or cheque in the name of whoever agent approaches you), and all this at the cost of higher interest rates and other charges that would follow which they have cunningly increased.
Only 3 months of fixed rate of interest, after that they keep it varying, as per their mysterious PBLR. we were initially told the first and the second year would be fixed, third year floating and this was only discussed when we asked them, smelling something fishy. How they twist it is, they say they meant financial year so if you are near to march, Deutche postbank’s first year in january 2011 will only be till march 2011, and second year starts from april 2011 unbelievable how smoothly they con people, here again the rate of interest increases to fixed+PBLR which again makes it sort of floating, but since PBLR is mentioned separately, they trick the customer into thinking its really fixed.
You cannot repay more than 25%(mentioned as partial in their communication, to not give a clear picture) without prepayment penalty at a time, or full repayment means 2% penalty(the highest limit as per the average which has to hover around 0.2-2%), which is a very restrictive trade practice, to keep the customer enslaved. which means either pay 2% with the complete prepayment or pay at-least 4 months of interest, as only the interest is getting paid initially. so if you cant pay the full, which they know most people cant, a 4 month installment(25%) on even 24-26 lakh will come close to 1lakh which they will take while you get no reduction in the principal amount. if you could pay say 33% or in 3 installments(with other banks) you can save almost 25000 per month, which they dont allow. see how the trap is laid?
They are not under/governed by RBI, still they will tell you RBI increased rates every time they increase their rates yet they do not bring down the rates if RBI reduces it so you get no benefit if Govt lowers the interest rates, RBI will be acting helpless or like a cat with eyes closed drinking milk, they cannot save you now even if you put a complaint, They are a private independent home finance institution.
Their documents are filled with clauses that they can use to charge you yet be legally safe(normal business procedure, but here is where all the half truths are which will be used against you, which is actually the horrifying part, a breach of trust), most people when they hear their loan is going to get sanctioned, and in the bliss of moving to their newer homes, put their faith on institutions like these and forget reading and scrutinizing each point, because if you did, you will realize that how much of a monetary black hole you are getting sucked into. charges/additional charges, spiking interest rates without information, no benefit on reduction of interest rates, high prepayment penalty or indirect limit on prepayment.
there are other better banks and this is like Britishraj part 2, who try to suck you dry, like a gigantic Deutche mosquito you might see in a B-Grade Horror Flick!.