Dear Mr. Modi,
I am Arvind Joshi, a middle-class resident of India, seeking a house of my own, in my own country. I am writing this letter to you in anticipation that I may get answers to the questions that have remained unanswered to many who wish to have a home, and for that need a home-loan.
Well, I will start my story from here.
While growing up, an elderly relative of mine once shared a key philosophy of life with me and it goes this way – “In a guy’s life, especially salaried, three things lay the foundation of his success. And those things are – naukri, chhokri and apna ghar. The last achievement means you now have a complete life.” I found this philosophy really amusing back then. As I moved up further on life ladder and realized business was not something which I could call my sweet cup of tea, I found this philosophy getting closer and closer to “realty” (pun intended).
The above philosophy was just a stand from a guy’s perspective and is not just limited to the male population of the society. Today a house is more than just home. Be it a man or a woman, all find it one of their primary requirements. Real estate has become a mandate among the various available investment instruments today. And it is a different bliss altogether to achieve the level completeness today in the life whose means are run by a fixed monthly monetary reward credited in your salary account.
Hence, owning a house is the most important goal for most of us today, including me!
Honestly speaking, to own that one house is a herculean task, especially for working executives, despite the mushrooming of all sort of procedural facilities, such as home loans etc, it is still not easy to own a home in the urban jungle of our country.
The government, private financial institutions, banking sector, construction magnates; anyone and everyone seems hell bent on making sure that every citizen owns a house to his name. However, the process to get one has been so complex and full of potholes that one needs some extra-ordinary acrobatic skills to hop and jump and duck through hurdles to achieve this simple dream.
The hopes are beaming high with you coming into power and introducing many new reforms, while discarding old and stale ones. Yet, the procedures remain.
Therefore, to you Mr. Modi, my questions are:
Is buying a house as easy?
Finalizing a property from various options is the first step. The next most important and most tedious task at a salaried person’s hand is – Home Loan. There are various banks and financial institutions claiming to provide best possible assistance in achieving your dreams, offer you the best interest rates and loan amount. Life seems to be getting closer to completeness and achieving an eternal bliss. Doesn’t it? But, is it all workable?
No, it’s not as convenient. Let’s have a closer look at this outside financial support system called LOAN.
Home Loan Processing
The first thing is to decide which bank you want to get the loan from, and depending on whether it is private or government, the processing differs. Getting a loan from a private bank is far easier. You may even feel like at times as if their sole purpose of existence is to get your dreams fulfilled and thus achieve salvation. How easy is that? What makes them score over government banks?
However much we Indians curse the government system and its lackadaisical service attitude, we somehow tend to prefer a government bank when it comes to savings and loans, for it is tried and tested and most importantly, “believed” from generation to generation. But, when it comes to accepting and processing your request, you may sometimes be forced to think whether you are breaking their dreams to achieve yours.
So it goes this way. First you finalize your dream (your property). Then you check, which all banks are associated with that project. You choose one of them, with above considerations being one of the foundations. The bank goes through your credentials that your are required to provide, checks your eligibility and approves your loan amount accordingly, and disburses it to builder, only when you have paid your booking amount (which is 20% in most cases) and obtained the sale and construction agreement from the builder. But, to establish the eligibility, the procedures are not too friendly. Can we amend them, or have some alternatives?
Which is a trusted source for home loan after all?
Government Policies, Laws
That is one tough part. Here your credit history plays a very important role as it affects your CIBIL score. Whether the loan gets approved, and if it does, the amount of loan approved, this all depends on your CIBIL score. So the blot of your past financial sins, committed knowingly or unknowingly, have an impact on your dreams today. Why so?
I heard there is a long and tedious process involving a plethora of documentation to obtain a home loan. Is that right?
If yes, what are all those documents? I have no idea, please enlighten me!
My next question is, how do I establish that who is offering me the best price on property and interest rate on my loan? The real estate market is ever so unpredictable and fluctuating. The banks seem to be in a battle to win the clients and build the “Valued Customer” list. Can you help me to approach the best financial institution?
Like banks, builders are also in an everlasting competition to offer the best to lure the buyer. One of these temptations is pre-EMI options. A pre-EMI option is where the loan amount is disbursed to the builder partially with the constructions stages, and the buyer has to pay the interest on the accrued money. Appealing, isn’t it? But is it really that appealing? Please enlighten me on that too!
Dear Mr.Modi, the above are not all, but a few foremost questions that I wish to ask, associated with my home loan. I definitely want to pay the least to get the most, and the one of the major worries on top of my mind is, how to make the best utilization of my investment? After all, it’s my hard earned money, and it is not every day that you go shopping a property or a flat. Hence every step and consideration is as important as the next.
Do you agree with me Mr. Modi?
Few Tips for Home Buyer:
It is recommended to do to thorough research on the property and loan, seek and expert or at least specialist advice which you may get from someone who has the hard-core savoir fare of the real estate arena. Comparison of properties and loans is a mandate which goes without saying. Try to understand any hidden clauses and untold benefits, like pre-EMI which sometimes builders avoid to mention, and less processing fee of the loan. Since your CIBIL score plays a crucial role in your loan approval, try to minimize your debts and clear off any outstanding. And most important of all of above, don’t give up on your dream.