1. Low interest rate isn't always Best
Nowadays, every lenders compete to claim that one interest rate is among the lowest in the country via advertisements. However, low interest rate does not means low early exit fee or flexibility of repayment. You have to understand that this is their marketing strategy to get your 1st impression on their home loan package.
2. Compare the Home loan packages
There are many different types of products on the market. Equal monthly instalment package is the most famous in the country. For under construction property, you must stress for monthly instalment to be commence immediately instead of upon full loan disbursement. The best side for this is you can service both interest & principle amount. You have to understand that service interest portion during construction period does not reduce your principle amount until you serve your 1st instalment upon completion of your property.
If you manage a current account, you can always ask for a better package that link your housing loan to your current account whereby the credit balance in your current account will be used to reduce the housing loan balance outstanding for interest calculation, thus resulting in interest savings. If you able to maintain daily credit balance in current account equals or more than your outstanding loan principle, the full amount of monthly instalment you pay will direct to set off the outstanding principle without paying any interest portion.
3. Take advantage of bank competition
Shop around before you accept any offers. Most of the terms & conditions and interest rate are negotiable as the banks will try their best to retain the customer.
4. Establish Savings Habits & Prudent Spending Behaviour
Banks like to see a record of good savings of their potential loan customers. Good savings habits & spending behaviour of a customer will lead to fast approval of loan application. It is encourage to have 20% of savings from the total loan amount.
5. Mortgage Insurance | Fire Insurance | Solicitor's Fee | Down payment
Many consumers don't understand the importance of issues like insurance & solicitor's fee. Mortgage insurance & solicitor's fee can be financed by most of the banks. The amount can be substantial based on the loan amount.
Some banks are offering zero entry cost & free legal documentation, which mean that the banks will pay for the legal documentation fee between consumer & the bank.
Mortgage insurance likes MRTA is a very important feature in a housing loan product. Paymaster of the loan account or the main income contributor of the family is strongly advise to take up the insurance to minimise the risk and to protect your loves one in any unforeseen circumstances. The insurance will cover the outstanding balance of loan amount (full insurance) when the insured person death or permanent disability.
6. Read & Understand the offers
Don't sign anything you don't understand. Remember to read and understand the terms & conditions, loan structure, repayment period, loan amount & insurance policy. You are advised to consult professional credit officer rather than marketing personnel or brokers.
7. Review your account regularly
Ask for a copy the offer letter for your safekeeping. Review your loan & seek for bank's officer to arrange your loan structure for best option regularly. Banks usually willing to arrange the loan structure/interest rate to retain their good customers.
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