How to select a financier to finance the purchase of your home?

By Johann D. Daruwalla

Accommodation Times News Services

You need to bear in mind certain parameters while selecting a financier and then take a decision accordingly. It is certainly difficult to get the best in each of the following parameters and therefore some sort of compromise will need to be done on the basis of your priorities. The parameters are mentioned below :
Type of Product – Whether the financier is offering a loan product to suit your requirements be it for a NRI or for the purchase of land, etc.
Tenor Range – Whether the financier is offering the tenure of loan that you are looking out for.
Rate of Interest Type – This would depend on the type of Rate of Interest that your are looking out for i.e. fixed or variable rates of interest.
Rate of Interest Value – The actual Rate of Interest value would also play an important part in your decision. You must always compare the effective interest rate after taking into account all upfront fees etc. and the manner of interest calculation. i.e. monthly reducing, annual reducing etc.
Min. Loan amount – The minimum loan amount offered by a financier is important to find out if the financier can finance the amount you are looking for.
Max. Loan amount – Most HFIs have a upper limit on the amount that they would finance. If you are looking for a very huge amount, this could be a factor that needs to be considered.
Min. Age of customer – You will have to consider this factor to see if you fit into the age norms laid down by the HFI.
Max. Age of customer – This would also form a parameter in your decision on deciding a HFI to finance the purchase of your house.
Max. Permissible LTV Ratio – The maximum loan that you would get as regards the value of your house needs to be looked at. THE Components of the value would also be important.
Minimum Income – The income norms of the HFI will be a relevant parameter that would affect your decision.
Requirement of personal guarantors – Some HFIs insist on a Personal Guarantor. You need to check this out if you have any reservations about providing a guarantor.
Requirement of Co-owner – If you intend to buy your house along with a co-owner, you will have to check whether the HFI accepts the relationship between you and the co-owner.
Requirement of Co-applicant – As mentioned for co-owners, the HFI may also insist on only certain relationships as joining your application as a co-applicant. This needs to be checked out while deciding on a financier.
Pre-Payment Charges – Some HFIs charge certain prepayment charges when you decide to prepay your loan either in part or in full.
Processing Fees – HFIs charge certain fees as processing fees that you will need to pay at the time of submission of application. Kindly check this out before selecting a financier.
Administrative Fees – As mentioned above, HFIs also charge administrative fees on the loan amount that has been approved by the HFI. This would vary from one HFI to another.
Credit Documents – The type of credit documents that HFIs insist before approving your loan would differ from one HFI to another.
Max age of property at the time of application – If you are buying a property on resale, this parameter would be an important one as HFIs may have a limit on the age of the property at the time of disbursing the loan.
Pre-approved property list available – most HFIs have a pre-approved list of properties available for which the documentation would be simpler.
Pre-approved list of employers – HFIs may have special rate if you are an employee of one of its preferred list of employers.
Pre-approved builder list – HFIs may also have different norms or documentation if you are buying a property in any of their pre-approved list of builders.
Pre-approved project list – HFIs, as mentioned above for builders, may also have separate schemes for certain projects.
Pre-approved profession list – HFIs may have certain schemes to suit customers of certain professions.
The above mentioned are some of the parameters that you will need to look at before deciding on your financier. Getting a financier who would offer you the best in all of the above parameters is virtually impossible. You would therefore, need to identify your priorities and the check out on which financier would give you the best option.

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