Expert advice

Aug 26, 2014,13.56 IST

Home loan borrowers must know their responsibilities

Sukanya Kumar

At times, the home loan process can be a difficult and stressful process, and many times, borrowers get frustrated at the financial institution for the process not moving swiftly and seamlessly. It is important to understand the potential borrower’s responsibilities towards the lender as well. In fact, adhering to these responsibilities can support the home loan process to be easy and trouble free. In our home loan advisory firm, there are many cases of clients frustrated at banks for errors and time delays, when in fact, they could have themselves avoided such problems. Let’s take a closer look at the responsibilities each prospective home loan borrower should be aware of.

Be confident in your ability to meet your EMI requirement
Before deciding to apply for a home loan, every individual should be aware of his or her short-term and long-term financial goals and requirements. This will ensure the borrower is fully confident in meeting the EMI requirement. While evaluating your financial goals and requirements, there should be an allocation of funds kept in case of emergencies for any foreseen expenditure that may pop up in the duration of the home loan period. Most importantly, the borrower should be practical and realistic while choosing the terms and tenure of their home loan.

Choosing the best product for yourself
With banks coming up with products that cater to the needs of a wide variety of audiences, there are many options available, and you need to spend time to understand which product best suits your requirements and needs. Understanding each product in-depth and understanding its respective advantages and disadvantages are extremely important to make the right choice. Choosing the wrong product can cause a lot of heartburn later, and it is better to spend time and make the right choice. In such a scenario, get help of an advisor to guide through this process is a great idea!

Read the home loan document carefully
It is imperative for every borrower to read the loan document carefully including all the terms and conditions. This will not only enable you to understand the conditions of the loan better, but also be informed about any hidden or extra charges that can be levied. It is important to have a complete understanding about the lending institution including all the terms and conditions. It would be wise to consult an advisor in case of any confusion rather going ahead without a thorough understanding as this could lead to great frustration in the future.

Fill up all the relevant information carefully in the application form
Many a times the applicant misses to provide relevant information like other loan details, other source of income, highest educational qualification, and number of dependents etc. which are extremely important for the credit appraiser. Such information cannot be known by the counselor unless informed and if the information is unavailable to the appraiser, it takes away precious time on enquiring and responding.

Choose carefully while writing down your references
Lenders always seek at least two non-blood references, such as colleagues, friends, neighbors etc. Be careful while referring such persons and be sure of their contact details and address. Most importantly, ensure that your references are informed of the call they are going to receive from the bank.  A lot of times, due to 'negative report' for such petty reasons, the application needs to get reprocessed causing a full-circle of verification.

Mention to the adviser if you have had any past issues with any lender
Sometimes even it was not your fault, there could have been issues with some lender in the past which may have or may not have been resolved. Do not forget to narrate it to your adviser. He/she will advice you on how to state those details and share the correspondences you would have had regarding the dispute. This would help you by way of the current lender not 'discovering' it, but by way of your self-declaration, which gives more confidence to the credit appraiser and saves you whole lot of time.

Inform your home-folks, secretary, receptionist & security guard
You must remember that lenders will verify your whereabouts like current residence, workplace, telephone numbers, income documents, bank statements provided etc. Though it isn't possible for you to inform the world that you are about to borrow, but at least mention this to your relatives staying at home like parents, spouse or even the domestic help that there will be verifications conducted wherein it will be enquired whether you live there or not. They should not resist such information thinking 'why are you asking?'

Similarly, inform your secretary or receptionist that there will be calls coming from lender's office for verification & they should not ignore them thinking 'it's another tele-caller’ and instead transfer the call to you.

Write the property address clearly in the form
A lot of times a lender needs to see the property-verification report before sanctioning a loan. For example, if you have applied for a loan switchover from another lender or applied for a Loan against Property (LAP), the valuation of the property, the legal report and the location of the property is relevant for the loan sanction amount, loan tenure and rate of interest. So, please make sure that the address, location map and the occupancy details of such property is mentioned clearly. Not getting an entry in the property due to unavailability of your tenant or the security guard not allowing to click photographs of the property or in worst case not able to locate the property will definitely delay the process very much.

Borrowers need to be aware of the responsibilities they need to exercise. From the rules and regulations of each bank to the terms and conditions of each product to understanding the borrower's obligations, understanding these aspects is crucial to ensure your home loan process is seamless and trouble-free. It is not all in the hands of the lenders to make sure your loan happens quicker, but you as an applicant should ensure that you provide complete cooperation to the lender in the entire process.

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