Understanding Option Chain

5 Common Home Loan Mistakes

Home Loan Mistakes
Home Loan Mistakes

Home Loan mistakes may cost very heavily on your pocket. I call common mistakes during Home Loan process as a Home Loan mistakes. Home Loan is a long term commitment and many borrowers take it casually. I personally feel that whatever impacts you financially should be taken seriously. In past, i have written similar posts like 8 Ques You Should Ask Home Loan Provider. This post is different and related to the behavioral aspect of a Borrower which is equally important. Unfortunately, Home Loan mistakes cannot be corrected in most of the cases. The reason being, there is a time pressure on a buyer to close the transaction. In such cases, the only option is to LIVE with the Home Loan mistakes. A corrective action can be taken in future but again it may cost you financially and efforts from your end. The best strategy is to “Ask when in a doubt”. I hope you will find this post on Home Loan mistakes useful.

5 Common Home Loan Mistakes

1. Interaction with DSA of Home Loan Provider:

In most of the cases, a borrower interact with the DSA (Direct Selling Agent) or 3rd party agents of Home Loan Provider. Even if you approach the branch directly the bank employee will route you to the DSA. Normally, a bank employee is either helping the DSA in achieving targets or commission is involved. As i mentioned in my other posts that it is good to have DSA as this guy help in home loan operational work. Now you must be wondering how it is a part of Home Loan mistakes. I have observed that just to get business these poor guys promises a moon to the borrower. Most of the times commitments from the DSA are not fulfilled and the borrower is frustrated. Therefore, it is one of the common Home Loan mistakes. Once you signed the Home Loan Application then you are trapped. To avoid such Home Loan mistakes, once you finalized the T&C with DSA you can visit Home Loan Manager. The Loan Manager should be an employee of Bank or HFC. You may discuss all the finalized points with him and take his consent. After the discussion, you should also send an email on mutually agreed terms and conditions. In few cases even bank employee back track :).

Also make a point that you should never route your Home Loan through the Home Loan agent of a Builder. It is one of the biggest Home Loan mistakes. This guy will never give you a correct picture about the project.

2. Fraudulent Home Loan Charges:

In many cases, i observed that Home Loan Borrower is fraudulently charged additional amount. It is mostly applicable in case the borrower is under stress due to timelines or his loan is rejected earlier. Another scenario is if the project is approved by very limited Home Loan providers. I will say that borrower is responsible for such Home Loan mistakes. DSA’s demand petty cash under various heads without proper explanation. In other cases, i observed that DSA demanded upfront Rs 10,000 to get Home Loan approved. Trust me DSA’s or for that matter Branch Manager or Bank Employee don’t have any role in Home Loan Approval Process. You need not pay single penny except scheduled charges for Home Loan Processing. The only exception is the petty amount for notarization of some documents. Before any cash payment, you should check why it is being demanded.

3. A threat to reject Home Loan:

This is a common problem in PSU Banks or in small cities. Again lack of awareness is responsible for such Home Loan mistakes from borrowers end. A bank or HFC bundle financial projects by threatening the borrower that his/her home loan will be rejected. To clarify, there is a separate team in Bank or HFC which undertake borrowers risk assessment and approve or reject Home Loan. If a borrower knows his rights then he will not commit such mistakes. If you face any such situation, you can immediately highlight to the Regional Manager of Bank or to higher authorities. I explained the same in my post Bundling of Financial Products is Illegal. If you buy or opt for any bundled financial product under threat then it is also one of the Home Loan mistakes as you will be paying for the same.

4. Blind Signatures:

 A borrower is in a so much hurry that they sign all the documents blindly without going through the same. One of the biggest loopholes is that your Home can be collateral for other loans as i highlighted in my post, Is you home collateral for other loans?. This is one of the examples. Now you must be wondering how it is Home Loan mistakes as the agreement is standard. I agree, but the objective is that you should be aware of all the terms and conditions of Home Loan in advance. It should not be a shocker for you in future. Moreover, if you are not comfortable with any of the terms and conditions then you may check other options. Another example is of renewable home loan protection plan clause in an agreement. Therefore, you should go through each and every word before signing below the dotted lines.

5. Acknowledgement for List of Original Documents submitted

This is the mother of all Home Loan mistakes. Most of my clients never kept track of and demand acknowledgment for original property documents submitted with the Bank. This mistake can cost heavily if bank misplaces any original document which is very common or at the time of Home Loan Closure. One of my client Ms. Rupali Patel did not receive original Sale and Construction Agreement after she closed her Home Loan. Now, It is hard to believe that bank can process home loan without these 2 original documents. But since she didn’t have acknowledgement from bank’s side therefore she had to accept the docket without these 2 original documents. It is advisable to keep track of all original documents submitted with the bank and demand acknowledgement from bank/HFC. Though banks are reluctant but persistence is key. As the original documents are submitted in installment therefor you should always send an email to the bank as and when you deposit any original document to keep track of same.

I tried to cover all important points, but the list is long. You can post your comments or queries on Home Loan in following comments section.

Copyright © Nitin Bhatia. All Rights Reserved.

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rajeev
rajeev
9 years ago

Dear Sir
I am planning to take home loan of 75-80 Lac at Bangalore for 15 years- Request to suggest which bank i should go for- I am in discussion with LIC & ICICI and may check with SBI also.
Shall request your feedback which bank will be best from all prospect.
Regards
Rajeev
rkc2299@gmail.com
8870002302

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  rajeev

SBI or ICICI Bank.

rajeev
rajeev
9 years ago
Reply to  Nitin Bhatia

Thanks Sir . Will it make too much of difference if I take loan of 65000 from ICICI and not from SBI, for 16 years in current ROI. If it makes no difference I will go with ICICI bcz I have salary account with ICICI and it will get processed fast.
If Sbi gives me substantial saving for same loan and period than I will go for Sbi. Request me to suggest one ICICI or SBI. Regards

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  rajeev

You may go ahead with ICICI Bank.

Vipul
Vipul
9 years ago

I have taken SBI home loan recently @ Mumbai (disbursement on 08-Sept). When I met officials at RACPC asking for list of original documents in their possession for my loan account, the answer that I got was, it was too early to get that list and I have to provide a valid reason why I want that list. Further it was commented that the bank issues such letter in case of home loan closure and can not give it on random request. Is this a valid ask from them? I feel as a borrower I have full rights to get such letter/declaration from the bank. Although in one of the loan document called Arrangement Letter they have mentioned those documents provided by me.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Vipul

As i mentioned in my post, An acknowledgement from bank is required. I am not sure about content of arrangement letter mentioned by you.

Vivek Vishwakarma
Vivek Vishwakarma
9 years ago

Do Banks allow scan copy of the registry or do they just give photo copies , should I take the acknowledgement on bank’s letter Head?

Nitin Bhatia
Nitin Bhatia
9 years ago

They give photocopy of sale deed. You can take ack from bank as i suggested in my post.

NM
NM
9 years ago

Dear Nitin,

Please let me know if i can do the prepayment of INR 10 lacs with the help CASH deposit.
Also if i cant do it then how much maximum i can pay by the way of cash prepayment.

My provider is ICICI Home Finance.

Thanks

NM

NM
NM
9 years ago

Dear Nitin,

Please let me know if i can do the prepayment of INR 10 lacs with the help CASH deposit with respect to Home Loans.

Also if i cant do it then how much maximum i can pay by the way of cash prepayment ?

My home loan provider is ICICI Home Finance.

Thanks

NM

Rachit Jaiwant
Rachit Jaiwant
9 years ago

Hello Nitin.. Thank you for the informative posts. Have been of great help to first time buyers like me. I am currently looking at purchasing a property through resale in a gated society by Omaxe. The possession to the current owner is still due but should be closed within a month. I am expected to do a sale agreement for this property before the my home loan disbursement can happen. However, the bank now tells me that in case there is a home loan that is already covering the property the seller will have to foreclose his home loan before my loan can be disbursed. So I have two queries. One, what is the best way to validate whether there is an existing home loan on the property. Two, is the claim of bank a general practice? (For example, if I do take this property and want to sell it in two years in case my plans change, there is no way that I will be able to foreclose my loan to facilitate my sale)

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Rachit Jaiwant

1. Best way to check is whether seller has original property documents or not.

2. No this is not a standard practice. Even if there is existing home loan then your bank can close outstanding loan of a seller from your home loan. You may check with your bank for possible reasons. Seems to be some other concerns of a bank to approve loan for this property.

Shamin
Shamin
9 years ago

Dear Sir,

I M Buying Flat In Bangalore Which Is Resale,Owner Having LIc Loan On This Flat,Now I Am Also Thinking To Taking Loan From Lic,Because Project Is Approvals By LIc,

Is It Lic Is Good For Home Loan And Can I Take Over Seller Loan Will It Be Easy Or Shall I Take New Loan And Ask Seller To Close His Loan,

Please Guide As Per Your Views

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Shamin

I will prefer loan from bank like SBI or ICICI Bank.

Murali
Murali
9 years ago

Namaste Nitin, Thank you for sharing your experiences and valuable information on critical subject ” Home Loans”.

I am looking for a banks / HFC (Hyderabad) that can give home loan on Agreement on Sale than Sale Deed (Registered) amount. I appreaiciate for your response in advance.

Regards
Murali

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Murali

You may approach ICICI Bank or Axis Bank.

chris cintella
chris cintella
9 years ago

sir, i am buying flat at chennai for 42 lak and planning to take home loan for 30 lak. is it good to take fixed interest rate or floating?

and in icici they are giving fixed interest rate for 9.6 for 10 yrs for part payment will they impose charges of 2%

Regards,

CCM

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  chris cintella

I will prefer floating interest home loan.

Avishek pandey
Avishek pandey
8 years ago

I have applied for a home loan of 10LKH from Bank of Baroda. Its almost 45 days but i am still waiting for a good responce. Processing charges has been deducted from my account. When i contacted the bank for status they are saying that my file is in RFL and its under processing. Valuation and Paper checks has been done. How long does it take? and Is there still any chances of rejection? Bank manager is saying that i will get the sanction letter by next week. I have a good credit score of 771. Need some advice.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Avishek pandey

It is subjective but normally home loan is approved in 2-3 weeks time.

Pazhani selvam J
Pazhani selvam J
8 years ago

Hello Nitin . I have a query. May not be on same line with above topic.
In our apartment there are 10 houses. total sq ft of the land in which apartment constructed on 4000 sq ft. every individual UDS is 320 Sq ft. as per the sale deed. if we sum up we get 3200 Sq ft only. Builder doesnt own any apartment. how the remaining 800 sq ft can be accounted now. Will builder has any role in this.
Is this same for generally all apartment. KIndly share your view on this. thanks

Nitin Bhatia
Nitin Bhatia
8 years ago

You need to check the FSI or FAR of your apartment. The total constructed area equals to FAR X land area. Assuming FAR is 2 therefore total constructed area is 8000 sq ft. The UDS is calculated based on total constructed area.

Sam
Sam
8 years ago

I am a first time home buyer (a NRI) and have made 3-4 payments (including registration) totaling up to ~ 28-30% from my savings for an under construction home. My schedule payments of ~5% are due every 2-3 months. I am now planning to procure a home loan for 70L. What factors should I consider ? Typically, now long will this process take as an NRI ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sam

Home loan can be processed in 10 days to 30 days time depending on case to case basis. For your other query, please check my posts on Real Estate and Home Loan.

vkjain
vkjain
8 years ago

good morning sir
as i am signing an agreement for dsa or referal agreement
as this is it me 100% gaurantee for the loan amaount

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  vkjain

It depends on the agreement clauses.

vkjain
vkjain
8 years ago
Reply to  Nitin Bhatia

THANK YOU SIR FOR YOUR GRAT REPLY
AS I HAVE UNDER STOOD THAT THE BORROWER TAKES 100% AND ME AS DSA WILL BE LIABLE OF 100% LOAN AND THEY WILL SUIT CASE AGAINST ME AS DSA AT THE COMMISION OF 0.30% I HAVE TO BEAR THE REST 99.70% FROM MY POCKETS THEN WHY DSA NO USE

THANK YOU SIR

HAVE A NICE DAY

REGARDS

VK JAIN

A R J Kiranmayi
A R J Kiranmayi
8 years ago

Dear Sir
I have taken home loan from GICHFL. The branch manager says they never give Home loan agreement copy to their customers. I have not gone through the document but signed on many pages of the agreement (infact they didn’t give me time). I think it is difficult to get a copy from him. I want to know the terms & conditions in detail. Please suggest me what to do. Thank you.

Nitin Bhatia
Nitin Bhatia
8 years ago

2 copies of home loan agreement are signed. One is retained by the HFC and second by the borrower. You can submit written complaint in this regard.

A R J Kiranmayi
A R J Kiranmayi
8 years ago
Reply to  Nitin Bhatia

but we have signed on one booklet only.

Nitin Bhatia
Nitin Bhatia
8 years ago

In this case, you can ask for photocopy of same as it is your right.

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