How to choose the best home loan
“In looking for the perfect partner, you could probably miss the imperfect person who could make you perfectly happy.” It’s an interesting quote. You can replace “partner” with “mortgage” and the phrase will still make sense. Love is not always at first sight. What we’re trying to say is that there are a lot more home loans out there than meets the eye at first glance.
Let’s discuss some of the important aspects to consider when deciding on a home loan:
KING: It’s easy to get excited about the interest rate (ROI). Most lenders claim to offer the “lowest” return on investment. However, outward appearances can be deceiving if followed by frequent (upward) price revisions and hidden charges that lead to disillusionment. In any case, it is important to understand if the interest rate is “floating” or “fixed” and if it is floating, then what is the reference to which it is indexed. Variable rate means that the interest will vary according to the vagaries of market rates and fixed means that it will not change even if market rates change. Fixed rates come with their own set of caveats. Therefore, a variable rate is advisable, but go with a lender that is not known for frequent rate changes.
Speed: No one likes to be ghosted, but that’s the fate of many home loan seekers. After the initial sweet talk, there is no communication from the lender. Choose a lender known for the speed and simplicity of its processes. Processing a home loan is simply a matter of assessing your repayment capacity, your loan history, and the valuation of the property. It’s not open-heart surgery. If the lender is talking jargon and making it complex, you should probably cut your losses and walk away.
Loan amount and documentation: When you went on a date, did you take your prenup in your pocket? Everything you’ve done in your life probably can’t be backed up by documents. However, for most lenders, this is the beginning and end of their relationship with you. If they see a small gap in one of your documents, they may send you back heartbroken (and without a loan). New era lenders have found better ways to assess income and your other credentials without obsessing over documents. Try to find a lender who is willing to have a conversation before pestering you for documents. If your lender is willing to consider the income of all family members and all sources of income, this will allow you to get a higher loan amount.
Are they mobile first: “Paperwork” is not awake. Spending fuel and going to a branch is not “green”. It’s a digital world now. If you haven’t found a reason to visit your bank in ages, there’s no reason to make a pilgrimage to your home loan provider. Does your lender have an electronic signature feature to complete the loan agreement and other documents needed to process your loan? Does your lender provide a mobile app to make regular payments and track your loan disbursements and balances? Even an account statement or certificate of interest should be available on the app. Be sure to check the app rating!
Prepayment is your superpower! You wanted to own a house, – not be burdened with a mortgage for your whole life. You must therefore choose a lender who is not “possessive”. In other words, a lender who will allow you to prepay your home loan whenever you want. Many lenders offer low rates but will allow you to prepay or close your loan only on the 29th.and of February and only after being paralyzed after signing millions of documents. Prepayment is actually like magic. Regardless of the interest rate you’ve been offered, the best way to save money is to make small prepayments to reduce your loan amount. For this, however, you need to choose a friendly lender who does not create any obstacles to early repayment.
Reputation of the lender: Your lender is probably piecing together your entire life history before giving you a loan. You also have every right to a good old fashioned cyber bullying. Google your lender, browse their website, review their sample MITC (the most important terms and conditions document) that is usually posted on the website, and read online reviews before your final decision.
I hope the article was helpful to you, but I would like to end with the warning: “Choose your home loan as you would with a partner, both are long-term commitments”.
The opinions expressed above are those of the author.
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