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Ask Mint | When deciding on a home loan, don’t go just by interest rates

Ask Mint | When deciding on a home loan, don’t go just by interest rates
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First Published: Mon, Feb 23 2009. 12 21 AM IST

Updated: Mon, Feb 23 2009. 12 21 AM IST
To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A appears every other Monday.
I am based in Nagpur and am looking at buying a house soon. With so much talk about the varying interest rates offered by different lending institutions, how do I decide which bank/lending company to opt for?
I am sure that for you, as for most individuals, buying your own home would be a major decision as it involves a large sum. So, while interest rates per se may appeal at first, they cannot be the only deciding factor.
Since home loans are long-term commitments lasting 15-20 years, there are other equally important factors to consider before deciding on a home loan company—such as expertise, quality of service, in-depth domain knowledge and the company’s level of commitment and transparency right through.
My advice is that you must try and gather as much information as you can about the company’s loan procedure, product range, the fine print that goes along with the interest rate, documentation, quality of services offered and safe retrieval of the title deed of the property deposited as security for the housing loan, on completion of the loan tenure.
I am a Delhiite working with a BPO company. I have not yet borrowed to buy a property but I intend to do so in the near future. What precautions should one take while borrowing?
The current economic downturn must make all borrowers look back at the prudent practice of “never overstretch”.
In the past five years, many home buyers got carried away by the bullishness of the economy—and the low interest rates—and borrowed for every possible reason, whether genuine or otherwise. They bought houses that were beyond their needs. If the requirement was 1,000 sq. ft, they would buy 1,500 sq. ft.
But one should remember that if one goes overboard then one needs to be prepared for difficult times too.
So, while borrowing, it is essential to keep in mind the real needs and the capacity to repay.
Renu Sud Karnad is joint managing director, HDFC.
Readers may write in with their queries and comments to askmint@livemint.com
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First Published: Mon, Feb 23 2009. 12 21 AM IST
More Topics: Real Estate | Renu Sud Karnad | Property | Home | House |