It is a wish of the people in India to get anything at the cheaper rate and home loan is not an exception. They want to get everything at the best rate be it a vegetable in the market or home loan. It is a habit of the customer to hunt for the cheap one by comparing different options available in the market. Taking this as an advantage, many lending institutions are trying to trap the customer by offering a lower interest rate on the loan. As most of the customers just compare the rate of interest while taking a home loan, they easily get trapped in the tricks of the lenders who are trying to grab more market share in home loans.
Is Cheap Loan Home Loan Best Option?
Most of us want to pay less on the mortgage loans but, it would be wrong to assume that the loans with a low rate of interest are good options. Let’s look into the reasons why?
Lowest interest may not the lowest always
Most of the lenders grab the attention of the borrowers with cheap interest rates. Remember, a home loan is always a long term loan. If you are the victim of this honeymoon rate, you may enjoy for the period six months, the lender may later push you into a real high rate which is going to draw more from your pocket. Another reason why you may be offered cheaper interest rate from the lender is a fee and other related fee are relatively high and you will end up in paying more. Borrowers should be careful here, apart from checking the headline rate, they should also check comparison rate which includes fee and charges. Most of the times, the comparison rate will be one percent higher than the headline rate if the lender is offering you honeymoon rate.
Cheap loans are cheap for a reason
If you are getting a home loan at a really cheap rate, well, there must be a reason behind it. It is important for the borrower to look beyond the interest rate while taking a loan. If you are getting the loan at cheap rates, you might be missing most exciting features of the home loan like redraw facility, offset account or the possibility of temporarily reducing or freezing the payments. All these features may be absent when you are looking for house loan at cheap rates.
Another reason why the lender is offering the loan at cheap rates is a lack of Brach accesses which may be because they have a small network or just have their operations online. In this cases, it will be difficult for the borrower to resolve any query if it arises in future