subject: Questions That You Must Ask The Bank For Home Loan [print this page] Buying properties is easy nowadays since home finance is readily available by a number of banks and financial agencies. While the banks do make detailed analysis of your eligibility for the home loan and grant it after full verifications of your credentials, you also need to be a little discreet in your selection of the bank. Since it an years-long binding with the bank for payment of monthly installments once you take a loan, it is important that you shop around a bit and explore the various aspects of financing of each bank before selecting any one. Some of the questions for which you must seek answers are:
1.Rate of Interest: Naturally, the first point to enquire about is the rate of interest that will be charged by the banks. Most of the time the low rate of interest which is advertised in the media is also likely to be charged but the exact rate will also depend on how good your papers are for taking the low interest rate loan. If your case is not very strong, the bank may charge more interest but this will vary on case-to-case basis. So, you shall not go by what is being advertised. Rather, it is your file which will determine how much rate is being applied to your case.
If you have applied for floating interest charge, many times you are charged low interest rate for some months in the beginning and the rates keep rising thereafter after intervals of few months by small margins. This actually increases your burden of interest payment after some months, effective diluting the attraction of low interest rates in the beginning. So, it is better to seek information on the historical record of the bank or financial institution to know how frequently does it change the rate and by how much?
2.Pre-payment penalties: There are good chances that there would be penalties imposed on you if you decide to retire your debt earlier than the scheduled date. Some of the banks might not be having this condition of penalties. So, you must ask information on whether there is any such clause and if it is there, then what is the quantum of penalties?
3.Lock-in period: This is also a condition imposed by many banks which prevents the home loan takers from repaying the loan wholly or partly within a specified period of time from the date of taking loan. You need to ask whether there is any such condition and for what time period does it apply?
4.Other loans which can be provided besides the home purchase loan: While looking for home loan for buying a property, you might as well need loan for repairs and maintenance works which might be required or for extending or altering the property. For these activities, you might need further loans. So, while taking home loan for buying a property, you shall also ask your bank whether other loans are also provided or not.
