What to ask your loan manager when applying for a home loan

Your dream home could be within your grasp with a home loan. Get all the information you need with the right questions to ask the loan officer.

In today’s times of spiralling real estate prices, it becomes difficult to buy a house without availing of a home loan. However, in your excitement about buying your dream home and getting a house loan, you could inadvertently forget to ask the most important questions to the loan officer.

Allow us to nudge you in the right direction with a few questions to start you off.

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Q: What is my loan eligibility?

You might use an online home loan calculator to arrive at the estimated loan amount you will receive. However, only the loan officer can tell you your loan eligibility. To calculate your loan eligibility, consider your monthly income minus the Medical Allowance and Leave Travel Allowance (these monies will not be spent towards repaying your loan). The resulting amount will help the loan officer tell you much money you can expect to borrow. The eligibility is not an approval and does not automatically mean that you will get a house loan.

Q: What are the interest rates being charged?

Though interest rates are quite competitive across lending institutions, you can ask the loan officer to compute your EMI payable on the basis of both the fixed and variable rates of interest. If another lending institution offers a lower rate of interest, either opt for that institution or bargain for better rates with the one you have already approached. The rate of interest you eventually select must be chosen on the basis of how soon you can repay the loan amount and how much the EMI amount will be.

Q: Which documents do I need to submit?

The loan officer will give you an exhaustive list of documents that you must submit to avail of the home loan. These include proofs of personal identification, age, income and address. You can include the same proofs of your spouse or parent if you are applying for a joint home loan. You are also required to submit agreement copy of the house you wish to purchase/site drawings and developer agreement for an under-construction property, and allow a site visit by the lending institution’s designated officer to verify your own and the house’s credentials.

Q: What are the charges and penalties being levied?

The lending institution will levy application form and processing charges. Some institutions also levy pre-closure charges. Ask the loan officer for a list of all the charges and fines, as also the penalty levied in case you miss an EMI payment. You can ask for some of these charges to be waived off if you have a previous relationship with the lender.

Q: How soon can the money be disbursed?

This is a crucial factor, especially for those buying houses from sellers who are in a hurry to sell. A lender taking inordinate amounts of time to verify your documents and mull the approval process can cost you your dream home, so insist on the disbursal process taking place quickly. Ordinarily, the loan disbursal cheque should be handed to you in a period of one week from approval of documents and a positive site visit.

Keywords: Home loan, House Loan

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