Home loan: Checklist for borrowers

A house is generally financed with a home loan, while a certain portion is financed out of one's own resources. It would be advisable for a borrower to consider some factors before taking a final decision on whom to borrow from and how much to borrow. As a preliminary step, you should prepare a checklist covering specific areas. While discussing with a prospective lender the checklist will come in handy to make a comparison and take a final decision .

Some points to be included in your checklist:

Purposes the loan amount is available for - purchase of plot, construction or for both How and when the disbursement will take place Documents required to sanction the loan Eligibility to be a co-applicant Time taken for sanction and disbursement of loan. Generally, a bank takes 7-10 working days Maximum loan the bank is ready to disburse When EMIs start Method of implementing interest rate change - reduction/increase in tenure or EMI Method of calculating interest rate Guarantor requirement Phases of the loan disbursement Legal and verification fees payable by the borrower Rate of interest and effective rate of interest.

The effective interest rate should be taken into account for comparison Commitment charges payable, if any Processing charges payable by the borrower Procedure for switching over from floating to fixed rate or vice versa. The conditions and corresponding charges payable In case of purchase of land and construction loan, will the bank sanction separate loans or a composite loan Monthly EMI amount Mode of payment of EMIs direct transfer from bank account, postdated cheques or debit from salary Offer of a free or concessional insurance policy for the loan, house or against personal accident Impact of part prepayment on EMI - reduction of EMI amount or reduced number of EMIs These factors constitute a preliminary checklist only and are by no means exhaustive. You may add any number of additional points. This will help in comparing and negotiating with banks for a good deal.
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