Home A-Loan

Just as important it is to have a house, it is equally important to find the best lending source to obtain the best possible deal on a home loan. This is absolutely necessary in today's tight money market conditions. After all a percentage point difference in interest could mean quite a saving when it comes to a sizable loan.

With real estate costs shooting up, lenders have raised the maximum amount that can be borrowed, from Rs 1 lakh (HDFC in 1978) to Rs 60 lakh today (Shelters). On the other hand, it is suspected they could be wary of making long-term loans, partly because nobody wants to be locked up into a fixed interest rate in case the market escalates.

 

Loans are available with banks, insurance and housing finance companies at different interest rates. But apply some discretion. A lower interest rate might not necessarily work out to be a better deal. Shelters, for example, charges 19 per cent annual interest on a loan advance of Rs 10 lakh compared to 19.5 for Dewan Housing Finance. But there are other costs like its two per cent annual charge levied on outstanding loan amounts, taking the interest to 21 per cent annually, even though it is on a reducing balance basis. What's more, adding all the miscellaneous charges could mean ending up paying quite a lot.

The main table contains a list of housing finance companies, their minimum and maximum loan amounts, their interest rates, processing, administration or service charges and time taken to sanction a loan, claims which might not necessarily be adhered to. Either due to conditions not being fully met or varying individual

patterns that fall outside the scope of general requirements.

Common conditions to be met are the support of two personal guarantors, submission of employment details giving your income break-up, and, with some like CanFin Home Ltd, the EMI should not exceed 35 per cent of the gross monthly income. Some even require loan applicants to be under 60 years of age.