Among many things that go into property buying in India, choosing the right lender holds a greater significance. The moment you find the right loan provider, it improves your chances of getting an approval without any hassles while keeping your interest rates low.
This blog explains how finding the right lender is key to getting your home loan quickly approved and sanctioned. Let’s get started.
How to find the right home loan lender
Who can provide home loans?
The foremost lenders of home loans are scheduled commercial banks. Beside, you can get a home loan financed from HFCs (Housing Finance Companies) and NBFCs (Non-banking Finance Companies). Let’s understand them one by one.
SCBs (Scheduled Commercial Banks)
SCBs are the ones who have a maximum share of housing market for financial home loans to eligible borrowers. These banks are backed by a huge customer base and come under the RBI guidelines. Scheduled Commercial Banks have two categories — one Private Sector Banks and the other Public Sector Banks.
Public sector banks have highest government stakes while private sector banks have highest individual stakes.
HFCs (Housing Finance Companies)
Such financial companies are governed by the NHB (National Housing Bank). After scheduled commercial banks, they are the second largest players in the market. However, their home loan rates are higher than the scheduled commercial banks.
Another difference is that the home loan provided by the HFCs can include registration charges and stamp duty. Such options are not available in home loans obtained from commercial banks. Apart from this, customers who cannot pay a large down payment can opt to housing finance companies for home loans. HFCs also provide home loans to those who have been rejected by the banks.
Which one to choose — a scheduled commercial bank or a housing finance company?
It’s a common question whether to get a home loan from a bank or a housing finance company.
HFCs are suitable for borrowers who want to obtain a large amount for their housing investment. As per the RBI guidelines, a borrower can borrow up to 80% of the home value. In that case, the borrower needs to pay the rest 20% from their pockets. And, when the registration fees and stamp duty charges are added to the down payment, the percentage goes above twenty percent.
But in case of HFCs, the NHB adds up the registration charges and stamp duty fee to the overall cost. This gives borrowers a great sigh of relief.
Comparing the interest rates
Usually, home loans have two types of interest rates — floating and fixed.
Choosing a floating interest rate means the rate keeps on changing following the market conditions. When the repo rate changes, the floating interest rate also varies.
A fixed rate, on the other hand, keeps the rate constant throughout the loan tenure. Even after the market fluctuates, the rate remains the same. The banks or financial institutions receive the majority of the payment driven towards the interest rates, but after that, the tenure is focused towards the principal amount.
Which one to choose?
Whether you choose a fixed or floating interest rate depends on your requirements. Keep your financial goals and market trends in mind to choose the one that best fulfills your requirements. Compare them before making a final move.
