Choosing the right loan

Rates are among the most important criteria when choosing a home loan. Other factors include one’s financial situation, risk appetite, and the need for flexibility. You should also consider issues such as lock-in periods, legal fee subsidies, stamp fees, valuation, insurance, processing fee and legal fees. Most importantly, one must choose a bank that they are comfortable in doing business with.

Pointers when choosing for the right loan:-

Match duration: Check the maximum loan term that you can get.

Monthly payment projections: Compare the monthly repayment (based on different interest rate scenarios) from various providers to see if you are comfortable with the amount.

Interest Rate Comparison: Check to see if the bank offers fixed rate loans and how long the fixed rate period will be, especially if you anticipate interest rates going up. Bear in mind that interest rates do go down as well in the event the market is not doing well.

Fees: Check to see if the bank charges a processing fee, pre-payment fee, or third-party fee (such as a legal fee, valuation fee or insurance premium) There is a difference between penalty fee and processing fee so clarify this first with any bankers. Never assume that no penalty fee means you do not need to fork out a single cent in future.

Extras: Check to see if the bank gives free fire insurance and free valuation on your property. Banks may also give legal subsidies. Extras are only for the short term and unless you intend to stay for only a few years then you should consider other factors and place this as the last priority.

Penalties: Ask to see what fees will be applied if you do partial or full redemption of your loan.

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