Choosing mortgage lender

Selecting a mortgage lender is a complex and time consuming exercise. key factors to consider while choosing a lender:

§  Understand the total package: Mortgage products are complicated with myriad combinations of loan terms, down payment, points, and interest rate. Different lenders provide different home loan products that may vary in loan term, interest rate, and loan type (fixed vs. variable). The key factor to keep in mind is to simplify the product, and you can do so by understanding what the product implies for EMI, total interest cost, and future payment increases. Don't be swayed by teaser rates with low initial EMI that explodes after few years. Our MORTGAGE TOOLS are a good place to start to compare across products and decide what is best for you.

§  Prepay charge: Prepayment charge is the penalty paid by the borrower for making extra payments beyond the repayment schedule. It is an additional factor to consider.

§  Previous banking experience with specific lenders: If you already have banking experience with any key mortgage lender and you are a happy client then it is worthwhile to give them first consideration. You may already know people there and the additional trust factor makes sure that you have one less thing to worry about.

§  Trust & reference: Talk to your friends and family about their experience with different lenders. You don't have to make the same mistakes they committed.  Moreover, often personal references are not driven by any commercial intention, thus a good reference is extremely valuable.

§  Special relationship between seller and banks: Some builders have special relationship with specific lenders, thus you may receive some concession while dealing with them. While you are not obliged to finally settle with them, we advise you to explore this option. Many large builders get their projects "pre-approved" by specific lenders. First the lender examines the builder and project attributes (e.g. title of that project, the stage of construction, and builder's track record in timely completion). Upon successful review, it declares all properties in the project to be "pre-approved". This saves you from legal and technical checks.

§  Security: Usually the property you purchase becomes the security for the lender. However often other collaterals like fixed deposit or saving deposits may be used.

§  Time till closing: Time till closing varies from lender to lender and from property to property. To expedite the process make sure that all the required documents are submitted. Sometimes the lender also requires information about the property from independent parties, and this may also delay the closing of the loans. We suggest you get an approximate time line for the closing of the loan from the lender.

§  Possibility of delay in approval: Delay in approval may happen due to several reasons. Make sure that your documentation is complete so that you are not responsible for the delay. Contact your lender to find out the reason for delay and take necessary steps to expedite process. Also understand that some factors may be out of your control. In that case have patience.

§  See RBI guidelines: While different lending institutions have different rules, there is a set of general guidelines set down for lenders. Go through it carefully and make sure that the lender you choose abides by all these guidelines. See http://tinyurl.com/RBI-Home-loan