Home Loan- Use The Offer Wisely To Make The Best Of It!

You want to make new purchases or you are interested in making somewhat huge investments. For this, you need sufficient funds and so, you will think of taking a loan.  In that case, it is advisable for you to avail a home loan. You are likely to get this loan not only easily, but also with the least delay. With the loan amount, you can make your ‘dream’ come true! As regards the utilization of the loan amount, you are the deciding authority and there will be no questions as to how you have spent the loan amount. You can use it for purpose of making a world tour with family; or for higher education of your children; or for making investments.

To get this home loan, one should have a house of his own. If you have a house, in your name, there are a number of companies willing to offer this loan. As a matter of fact, there is severe competition among the lenders in giving this loan. So any lender will be very much inclined to offer this loan. It is for you to go round the finance market and collect as much details as possible from different lenders in respect of their loan packages. Then you can have a study of those details and analyze the pros and cons of each offer and then finally decide whichever is suitable to your needs. While making a study of the offers, you should be alert in spotting any concealed trap in the offers.

How will you locate the traps if there are any?  The APR is considered the best yardstick for purpose of comparison among the different loan offers. But then, the method of APR calculation is not uniform. So some lenders may try to keep some charges hidden. Because of this, the loan is likely to prove somewhat expensive compared to what APR would have indicated. To simplify the calculation, for purpose of comparison, there is a simple method. You work out the total cost of the loan, of course taking into consideration the interest charges, repayment terms and other fees, if any. 

There is a provision for repayment insurance. This insurance option is advantageous to both the borrower and the lender. It ensures full payment of the loan even if you are taken ill and unable to repay the loan. Even without your asking for this insurance, lenders themselves would suggest names of such insurance companies. If you agree to their suggestion, you will end paying interest equivalent to the value of the loan amount. You need not, therefore, agree to their suggestion in the matter.  You can make it a point to visit a number of lenders you come across in the market and gather complete details of their offer packs.   

There will be some fees, called ‘arrangement fee’ or ‘origination fee’ and these fees may have to be paid along with your application. Payment of this fee is insisted by the lenders irrespective of the fact whether you have been granted the loan or not, or whether you have accepted the loan or not. This will increase the cost of the loan to a considerable extent. How much will be the cost of the loan mainly depends on the rate of interest. In this loan, there is another option available. If the interest you are paying on the loan is on the higher side and In case you would like to shift the loan to a ‘lower interest loan’, you should see that the ‘exit fee’ will not come in your way.