If a house is still under construction, only a partial disbursement of the loan is made by the lender. This is done periodically and the final disbursement is made on completion of construction.

However, in some cases, the home loan company may be willing to make the entire payment even if the construction is not complete.

This is known as the Advance Disbursement Facility.

An advance disbursement is generally made if the buyer requests the home loan company to do so and if the home loan company is fairly convinced the builder will complete the construction on time.

No tax benefits are available in respect of repayment of a home loan in the year in which the construction of the property is not completed.

The process to find the best home lender to get the best home loan deal seems to be complicated for most of us. The reason is unsystematic approach towards it. Home loan seekers always dream to get the best deal. It’s commonly said - when you can dream it you can actual do it. In this article we will throw light on certain guidelines, which may help you to make your dream come true.

1) Finalize your property

Who wants to lose business? The answer is no one. Lenders very well know at the back of their mind that one who has finalized the property is genuinely looking for home loan and if they do not provide the best deal he/she may look for some other lender for the loan. So finalizing property strengthens negotiation power of the borrower, which is an added advantage. One more trick you can play if your property is bought from a reputed builder is to negotiate for the interest rate till 23rd or 24th of the month. As many banks have monthly targets for its staff and as the month end nears, the banks may offer slightly better rate to enable the staff to fulfill the targets.

2) Eligibility

Banks differ slightly in calculating the home loan eligibility. If getting higher loan amount is an issue, than check for the following:

• Check whether the bank will allow the clubbing of income of relative other than the spouse, such as income of parents, brother, son/daughter.
• Look for banks that give better eligibility of loan based on your disclosed income.
• Check whether the entire income is being considered including annual component of income.
• If you are self employed and income are spread over many entities look for bank that will consider all these entities.

3) Interest rate

Banks offer home loans on fixed or floating rates. Before opting for fixed or floating it is essential to understand the term correctly. Fixed interest rate is commonly understood as fixed interest rate for the entire tenure, which is not true. Fixed interest rate only remains fixed for certain period of time and not for the entire tenure. It always has a reset clause. The reset clause varies from banks to banks. It may be 3, 4 or even 5 years. So the lender has full authority the change the interest rate further. A floating interest rate, as the name suggests, “floats” upwards or downwards, subject to market conditions. Hence, these rates are revised whenever required by the bank. So if you are looking for floating interest rate check whether the rate of interest has gone down for a couple of years or not.

4) Check other charges

A good deal largely depends upon how one negotiates. It can save your cost on loan. Before lending lender’s primarily take into account the income and personal profile. While choosing the best home loan lender what you also have to take into consideration along with the interest charges are processing fees, prepayment charges, valuation fees, legal charges, and hidden cost.

5) To win something you have to lose something

To get a home loan the first step is to fill the home loan application form. A fee is charged which would be around 0.5 to 1% of the loan amount. The fee is known as the processing fee. One has to understand that paying the processing fee along with the application form does not mean approval of the loan. It only guarantees that the application would be seen. So you should be ready to bear the cost of processing fee.

I have availed a home loan from an MNC bank at an interest rate of 9%. They have revised rates of interest several time and current rate stands at 12.50%, since 1/8/08 ( previously it was 11.75%). Last year in August, they raised rates by 2% in one go and after lot of arguments and conversation, the rate was agreed at 10.25%. The requisite changes have still not been made. On asking the bank, I got to know that the executive who had made this commitment had no authority. I have written several times to several heads without receiving any response till date. All my EMI payments have been regular in spite of an increased interest rate. I have once again received yet another letter regarding revision of the interest rate, now to 12.50%-which is very high.

I had applied for home loan to a bank. I completed the related formalities almost two months ago. Once I received the loan approval letter, the loan agreement was executed within 20 days.

I have given 30 post-dated cheques (PDCs), a blank cheque, another cheque will is equal to the total amount of the loan. There are other original documents such as a sales agreement, the NOC, Zamabandi, etc. But, the issue is that the bank has not disbursed the loan till date for want of one paper or other, a technical issue etc. In the meantime, the validity of sales agreement expired and seller is not ready to return the money that was paid as advance to him. We paid about 25% of the cost of the house as an advance. Can I counter claim the amount from Bank since the seller is not ready to return the money? I can’t even arrange for a loan from another bank because my original documents are lying with this particular bank. I have been verbally assured that the loan will be disbursed soon. What do I do?