People borrow a loan for their requirements and sometimes even if they don’t require then also they borrow to save their own funds. Hence, the borrowing amount and the borrowers are not same.
Every individual, every business is unique, so is every loan application and the requirements. There are many factors and variables that influence the final cost of the loan. All these include the processing fees, legal fees, administrative fees, interest rate, loan amount etc. The basic costs are same but few charges are different for every one and vary from case to case. But, the question is, can you negotiate any of these charges?
Since there are numerable terms and conditions along with the tedious fee calculation, home loan calculations look like a difficult task that includes a trail of processes. The negotiation process is one of them and often too laborious that even experienced finance professionals struggle with the complexity of paperwork and banking norms.
Here we try to explain some key areas that home loan applicants should focus on while negotiating on favorable terms and conditions and can save considerable cost of the home loan.
There are quite easy and often convenient ways available in the market to avail a home loan at the best and attractive interest rates. Here the following tips will bring the negotiation ball in your court and allow you to discuss and avail the best of them. Try to put them in your practice at least 3-6 months before you decide to apply with your home loan application.
The experts from Mudra Home can guide you on how to negotiate the best home loan terms for yourself that’s can help you to save on your cost.
• Explore and contact as many Banks/NBFC’s as possible
• Discuss with as many Banks/ NBFC’s and other financial institutions as possible and ask them about the different home loan products available —-or alternately you can apply online and ask them to come to you. Mudrahome is one of the portal that helps and guide you to get you the best rates and get the consultation from the best of the industry.
• Many telemarketing services will be quite willing to do this for you. You just have to call on the common platform of all the available lenders and tell them that you are interested for a home loan. Try to freeze a free Saturday to hear out the best deals from the available Banks/ NBFC’s sales representatives or direct sales agents (DSAs) to call or meet you regarding your requirements.
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• Always take time with your home loan discussions. Without proper discussion you may face a trouble on a later stage.
• If the borrower is related to a job profile of sales or have ever been into sales, directly or indirectly, you must be aware of what monthly/quarterly/yearly target pressures mean to them. Sixty to eighty percent of the sales professionals are falling to meet the targets, and are ready to offer you amenable terms (i.e. terms you want) due to the competitive market. If you have explored the available options in the market then you can always quote the other offers from other banks while discussing such terms with the current lender. This can always help you get a better deal.
• Discuss and try to stretch the locking period of your home loan. The locking period refers to the number of days during which the promised interest rate on a pending mortgage loan will not change.
• You will not get this information in bank advertisements or sales calls, but the duration after which a Bank/ NBFC and other financial institutions changes the rate of interest or converts your fixed rate loan to floating rate can be stretched.
• Before you finalize the terms and conditions of your home loan, read the agreement carefully so that you will not face any sudden surprises during the loan tenor.
• Often, when the borrowers are unknown about the facts and figures that can affect the loan amount, they can single mindedly focus on EMI and the interest rates and ignore the other hidden charges and fees such as processing fees, legal fees, administration fees etc. The sales official from the Bank/ NBFC may quote you lower EMIs and interest rates and compensate for it by raising other charges to be paid towards the loan. While you track the interest rates and EMI quoted by the Banks/NBFC’s, make sure that you are also track all the related costs and fees quoted by the lenders for comparison. Don’t get fooled by the impressive rates offered by the banks/ nbfc’s and financial institutions.
• Keep a good distance from other loans.
In case if you have plans to apply for a bigger loan amount then ensure that you have already prepaid your other smaller loans.
• In case if you are planning to take another loan apart from your home loan, make sure that you do so after applying your home loan. It is important because while calculating your monthly disposable income it may affect your EMI.
• As EMIs on other loans such as personal, auto and education loans are directly deducted from your monthly income, this may affect the home loan amount that would be sanctioned to you.
• Last but not the least, get all the documentation regarding all the promises and future benefits from the Bank/ NBFC. The sales representatives from The Bank/Nbfc may mislead you by inflating benefits and promising future benefits, due to target pressure, even when they are not authorized to grant you such benefits. So, until you are sure of of everything, be careful and do not be fooled by false promises and big words of the lender.