6 mins reading
Last updated on 12th December 2023
When it's time to make your dream of owning a home a reality, the first stop for many is their regular bank. It's the go-to option, the safe choice. But what if we told you, there are plenty of alternative lenders offering competitive options that might just be a better fit for your needs?
Our blog will explain what to look for in a mortgage lender and why thinking outside the box when it comes to home loans might just be the best decision you ever make. From better deals to tailored solutions, let's explore the possibilities together!
Table of Contents
- Interest Rate Fluctuations
- Stay Alert for Hidden Costs
- Flexibility in Approval Criteria
- Watch out for Prepayment Charges
The Changing Landscape of Home Loans: In the not-so-distant past, your local bank was pretty much the only option when it came to securing a home loan. However, times have changed, and the financial industry has evolved significantly. Alternative lenders, such as online mortgage companies, credit unions, and peer-to-peer lending platforms, have emerged as strong contenders in the home loan market. This means you now have more choices than ever before, which can work to your advantage.
Discover why it's crucial not to limit your loan application to just one lender when considering what to look for in a mortgage lender.
Suggested read: Private home loan finance company list
Interest Rate Fluctuations
Interest rates vary between banks and non-bank finance companies, which is one of the important things to look at when applying for a mortgage. A minor percentage difference can have a significant impact, especially when you opt for a long-term loan. Just consider this scenario: a home loan of Rs 75 lakhs with a 15-year tenure. A minor difference of 0.5% in interest rates, such as 7% compared to 7.5%, could result in an additional expenditure of over Rs 4 lakhs spread across the entire loan tenure. So, if you're seeking the best mortgage banker or exploring bankers mortgage lending, it's essential to broaden your options and not restrict yourself to a single lender. This is what to look for when choosing a mortgage lender—the potential savings and advantages that different lenders can offer.
Suggested read: Home loan interest rate all bank
Stay Alert for Hidden Costs
Don't fully trust any bank that claims, “No Hidden Charges Involved”. When you're exploring what to look for when choosing a mortgage lender, it's vital to keep an eye out for these hidden fees.
Whether it's the expenses linked to the loan, legal fees, or the costs associated with obtaining credit reports – lending companies often add fees to initiate the home loan procedure. These fees can be listed separately or cleverly integrated into the interest rates. Moreover, these fees might be bundled into one sum or split into separate charges for different services. This can make it tricky to compare loan options. To make a well-informed decision, stick to your budget, calculate the total cost for both scenarios. Then, opt for the one that aligns more closely with your financial plans. Don't let hidden fees catch you off guard, whether you're dealing with a mortgage banker.
Suggested read: Home loan balance transfer charges
Flexibility in Approval Criteria
Perhaps you've experienced financial setbacks in the past, leading to a less-than-perfect credit score. Many mortgage bankers may view this as a red flag, potentially denying your loan application. Alternative lenders, on the other hand, often take a more holistic approach. They consider factors beyond your credit score, such as your income stability and the overall health of your finances. This means that even if your credit history isn't spotless, you might still be eligible for a home loan through an alternative lender.
Watch out for Prepayment Charges
Imagine you've got some extra money, and you want to pay off your loan faster to get rid of it sooner. Different banks have varying policies when it comes to prepayment charges. While some banks might impose substantial home loan foreclosure charges for paying off your loan early, others may have more lenient or even no charges at all. It's essential to inquire about a bank's specific policy before finalizing your home loan.
Conclusion: Embracing the New Era of Home Loans
Transitioning from the conventional route of securing a home loan through your regular banker to exploring alternative lenders might seem like a big leap, but it's a leap that can potentially save you money and offer a more tailored borrowing experience. Remember, the financial landscape is continually evolving, and it's in your best interest to explore all available options to make an informed decision that will contribute to your home ownership dream. So, as you embark on this exciting journey, remember to look beyond the familiar and discover the possibilities that alternative lenders have to offer. Happy home hunting!
FAQs about What to Look for When Choosing a Mortgage Lender
a home loan from a Non-Banking Financial Company (NBFC) can be safe if the NBFC
is registered and regulated by financial authorities. Research and check their
reputation before deciding.
Banks typically consider several factors before approving a home loan, including your credit score, income stability, employment history, debt-to-income ratio, the property's value, and your down payment amount. They also assess your ability to repay the loan based on your current financial situation.
Some prefer NBFCs for more flexible criteria and quicker processing, especially if they have unique financial situations or lower credit scores.
Yes, banks review your bank account statements to assess your financial stability, income, and down payment source.
Lending banks typically consider your bank account statements during the home loan application process. They review these statements to assess your financial stability, income, and the source of your down payment.
Home loans are approved by a team within the bank, including loan officers, underwriters, and credit committees. These professionals review your loan application, creditworthiness, property documents, and other relevant factors before granting approval.
Published on 12th September 2023