Planning to take Home loan from Kotak? Be prepared for a tough time….
After looking out for more than a year, I finally bought a new house, but don’t worry, this piece is not about that. With so many housing finance companies chasing you for a home loan, the choice is wide, from the established HDFC, ICICI to Co-operative Banks, the red carpet is laid out to you when you decide to take a loan….
…But as I found out, the length of the carpet at least in case of Kotak is very short.
I would have never considered Kotak for loan except that a cousin of mine knew few people there and I managed to get the loan at an interest rate 0.25% cheaper than the normal rates…however I had to pay for that benefit with my peace of mind.
It started off with the most predictable one – processing fees. While collecting documents and applications, I was assured that the processing fees would be only 5000/- plus service tax. I insisted that everything be given in writing, however the sales guy dodged that request. After completing the process in 10 days, just 5 days prior to my signing of the agreement with the seller, I was given the sanction letter. I was shocked to see that processing charges were 28000/-! I was really mad at the sales guy(time wasted being the major worry) and literally threw him out my house(though I felt guilty about that since I am also in Sales profession). I refused to take their calls for a day and the tactic worked. They waived off the entire processing charges except for the 5K paid initially and some franking charges worth 5K(waiver was also partially due to the contact who had managed to get me lower interest rate).
The next one came while disbursement. After having signed the agreement, I landed at their office in Kalina along with my seller for the disbursement cheque. Inspite of promising the cheque in the afternoon, we were kept waiting at the office endlessly. Finally I lost patietance and created a ruckus in their office. That’s when the branch manager came and after a few calls told that it won’t be possible to disburse the cheque that day!This after repeated assurances given earlier and during the day and after a 7-HOUR wait at their office! I was promised it will be delivered to me next afternoon but my weekend plan was already spoilt(it was on 29th December and I had elaborate plans with family for the long weekend).
As if this was not enough, when the guy came next day for giving the cheque, it was for a wrong amount! The amount was more than what I had asked for and I had to request the seller to accept the cheque and return back the extra money later(It didn’t help that the seller was based in ahmedabad).
Having finally handed over the cheque to the seller and taken possession, I thought this was the end of it, but then got a call from my agitated seller the next day stating that the cheque was not payable at par in ahmedabad and the bank was charging him 12, 000/- as commissions to clear it. I blasted the guys at Kotak since they were aware that the seller is based Ahmedabad and the cheque needs to be payable at par.
Obviously, neither the seller nor me were willing to foot the bill for a mistake committed by Kotak. SO the cheque was returned to Kotak for amending it and reissuing it. Kotak again took its own sweet time to re-issue the cheque and I had to escalate it to their Western Region head to fasten up the process(must acknowledge that he was the only sensible guy from Kotak amongst the many I interacted).
Inspite of all these trouble given by Kotak, they were not content. I was charged pre EMI interest of 2 days for the loan amount being disbursed on 30th(that’s the rule I understand many HFC have, 1st being the date of EMI), whereas the actual final disbursement happened only on 7th. SO instead of paying me interest of 7 days, I am being charged interest for 2 days and mind you the total amount in not small by any stretch of imagination.
There were many smaller issues, like making me compulsorily buy Term Insurance at a premium that was much higher than other insurance companies etc.
Some of the issues may seem trivial and I would have ignored them had they occurred in isolation, however the lack of professionalism and the cumulative effect of all the trouble make me regret the decision to take the loan from Kotak(considering it’s a 20 year relationship I have entered into).
SO this is the gist of my experience with Kotak and I would recommend everyone to stay away from Kotak and opt for either SBI or HDFC who may not negotiate on rate or processing fees but are much more professional.
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Update as on 25th March 2008.
As expected, Kotak Bank has not reduced the interest rates.where SBI has already reduced by 0.5% in two reductions.So even the one advantage I had has been negated.
Update as on 19th January 2009.
RBI Repo rate when I took the loan from Kotak: 7.75%, ROI charged by Kotak to me: 10.25%
RBI Repo rate now(Jan 2009): 5.5%, ROI charged by Kotak to me: 12%.
*So while RBI key rates have gone down by 2% or more, I am being charged 1.75% more!
There seems to be no end to the grievances being inflicted by Kotak on to me. Now when I want to foreclose my agreement and switch to SBI, they are talking about charging me a penalty which is non-existent in the agreement(2% on any part pre-payment done in last 12 months).
At this rate, I am likely to run out of space while sharing my problems on mouthshut.