Considering the current market scenario, investing in an apartment can turn out to be relatively profitable due to the high growth rate of real estate in Bangladesh. However, before you invest, securing suitable and low-cost financing becomes quite significant too. In our country, most people plan to purchase an apartment in Dhaka using personal savings first before turning to other financial sources, e.g. banks or Non-Bank Financial Institutions (NBFI). However, these financial institutions also offer market standard facilities for a house loan in Bangladesh.
Are you planning to get a home loan any time soon? Have you researched the desired lenders and required loan amount yet? Here is an essential guide containing the factors to consider before acquiring a house loan in Bangladesh.
Sure we all know about the interest rate. It is the first thing to pop into your mind because interest rate is the primary cost of capital. Based on several factors such as home loan amount, tenure and market condition, lenders decide on the interest rate. First, figure out a feasible loan package with the lowest possible interest rate. Second, compare your rate with the current market interest rate to secure the best deal available. Preparation is essential as interest rate often fluctuates with time.
Also, take note of your financial eligibility and credit history. If you have outstanding loans or poor credit records, you might not be eligible for the requested home loan amount from the desired financial institutions. Therefore, don’t forget to explore all available options prior to coming to a decision.
Fixed Interest Rate & Floating Rate
Does the loan facility include a fixed rate or does it float? Fixed rate means interest will not change throughout the credit period. This is the most common form of interest rate that can be found among most financial institutions.
If the home loan package consists of a floating rate, be sure to find out the range. Also, ask the lender when you can expect the fluctuation and by how much so that you can prepare ahead of time. Hence, don’t just compare interest rates, compare how elastic they are, too.
Expected Fees & Charges
Banks and other institutions go through several steps of loan processing, and they do charge for the service. Main charges include a loan processing fee, early adjustment fee, partial payment fee, penal charges, etc. Make sure you are aware of all such fees beforehand so that you receive exactly the requested loan amount. For instance, if you apply for a house loan in Bangladesh of 50 lacs, after deducting processing fees and other charges, you might end up with 49.8 lacs. Therefore, if you are informed about the costs, you can request for the correct amount to balance out the fees with your required amount. Also, don’t shy out. Just ask directly about potential hidden costs in the deal. Adding up all these charges might see an excessive expense; which you can easily avoid by picking the right lender.
Every financial institution has a unique filtration criteria and a set of requirements. Usually, prominent and multinational institutions have rigid screening systems. Based on age, occupation, credit history, solvency and such, banks accept creditors and disburse loans. Some may require a financial guarantee or an upfront cash deposit as security. If they need cash as security, know about the exact amount and prepare ahead of time. Consulting an agent directly can help with all these requirements and document verification processes. Collect and arrange the documents as needed to avail a smooth loan transaction.
Ask the lenders what other facilities they are willing to provide if you borrow from them. For example, credit transfer is one of the most sought after conditions in the home loan market where the borrower has the option to switch to another financial institution with better loan facilities. With time, the market may change, but if you borrow on a fixed rate and the market interest drops, you may want to switch lenders. The opposite can happen too. Undoubtedly a higher interest rate will increase your instalment payments. Also, you may want a regular statement about the deposit payments made to keep you updated with the remaining amount to channel your finances accordingly.
If you are a first-time apartment buyer, all these key factors for home loan might turn out to be a hassle for you. However, you can always seek professional help. One such professional body is Bproperty, who offers one-stop guidance during your hunt for property. In case you choose to go at it alone, do your research well and compare the benefits. Because why should you settle for anything that gets in the way of you getting the best property?