INVEST WISELY

Once a buyer has decided to opt for a home loan, there are some important things he should keep in mind, says KISHORE AMATI
Choosing a good lender: Good lenders are as important as good customers and if you are a good customer, in today's scenario, you should not have a problem finding one. A good lender is one who discloses all the terms and conditions in clear terms; is responsive to your routine needs and offers good rate. Remember that mortgage loan requires constant servicing for the next 10-15 years or longer and therefore return on investment (RoI) should not be the only reason to choose a lender. There are postdisbursement services like getting interest certificate every year on time, getting your regular account statement and loads of other services. Choose one which has strong systems and good record of after-sales service just like your AC or TV. Many smaller companies/ new companies offer good RoI to new customers: Ameya Naik, spokesperson of a reputed nationalized bank warns. He says, Don't fall for it, as your RoI may change over a period of time and smaller companies, many a time, offer lower rates to new customers and then, after a few months, start increasing the rates in the name of increased cost of fund. Remember that the RBI has no control over what a bank/ company charges as rate of interest. Each bank/company has its own cost of fund and can accordingly decide to charge whatever it deems fit as per the market scenario. The RBI increasing or decreasing its rate is no guarantee to your RoI going up or down. So one benchmark is to find out what a company is charging as RoI to a new customer vis-a-vis loans already running with them for the last two to three years and if you are too low than what existing customers are paying, well you know the answer (you know what's going to happen to you two years down the line). Negotiate smartly: Apoorv Naik from Ponda got himself a home loan recently. He considers himself lucky but also believes that it were his negotiation skills that came handy. He says, If you have good income and decent CIBIL score, negotiate for the home loan rates from various bankers, you might be able to get 0.25% to 0.75% lower than your best friend. This also means negotiating for your processing fee. Many banks charge 0.5% to 1% as upfront fee but this can be negotiated to anywhere between 0.1% to 0.5% depending upon your bank and your records. Please remember it's a free economy now and if you are good customer (meaning good income, lower exposure and good CIBIL record) you can really get a great bargain. Never think of applying to many banks at a time and then post approval try to negotiate with them: Pravin Kulkarni had an experience that taught him something the harder way. He shares, I thought it would be

wise enough to do so only to realize that it's a bad strategy in the current market. With the introduction of CIBIL, each new loan enquiry will reduce your score by approximately 10 points, and too many enquiries may cost you a cool 30-50 points and lower score takes away your power to demand better rate. So the best way is to first do some research and only after short listing, discuss your final deal with not more than two banks/companies. Fixed or variable RoI - a dilemma: Well, it depends from time to time, and like a good wealth portfolio, it's a good idea to analyse your liability portfolio as well on a regular basis to get maximum out of it; but as a thumb rule, if you are borrowing for a short time, ie, two to five years, go for fixed else go for variable, as in the longer term RoIs are expected to come down. Complete waiver of prepayment charges: Apart from RoI, negotiate with your bank either for complete waiver of prepayment charges or if not that at least 20%- 30% part payment fee waiver each year. It'll give you flexibility to close your loan faster without any exit barrier. Online loan accounts: Many banks nowadays offer online loan accounts allowing you to check your statements, take account statement and interest certificate without visiting the branch. It's a good idea to bank with such companies. Ideal choice: Since mortgage is a long-term loan, it makes sense to go to a company which has other lending products as well, like car loan, education loan, personal loan etc; if need be, you can get preferential rates on other products based on your track record with the bank. Moreover, you don't have to run from bank to bank for various financing needs. Overdraft facility: Some companies offer facilities like overdraft for home loan where a loan account is created in your name and you can deposit all your savings in the same bank thus giving you lower effective RoI as you have the flexibility to deposit any money any time over and above your EMI. Mutual benefit tie-ups: Some builders and banks have tie-ups for mutual benefit where you get benefit from both the parties if you buy a particular property and get it funded by a particular banker. Look for availability of such deals if possible. QUICK BYTES SINCE MORTGAGE IS A LONG-TERM LOAN, IT MAKES SENSE TO GO TO A COMPANY WHICH HAS OTHER LENDING PRODUCTS AS WELL, LIKE CAR LOAN, EDUCATION LOAN, PERSONAL LOAN ETC