Choosing the housing finance company (HFC) is a crucial stage in the home loan process. It is imperative to choose the financer with utmost care and proper consideration of its past track record since the customer is entering in a long-term relationship with the HFC when he takes a home loan.

The task becomes all the more difficult when one takes into account the burgeoning housing finance market in India. Besides the 32 NHB-recognised HFCs, the nationalised banks have also made housing a priority area and added the housing loan segment to their existing category to reach the individuals. In such a scenario, one needs to exert caution while zeroing in on the home loan company.

Apart from issues such as interest rates, repayment period, home loan agreement and eligibility, customers need to check the hidden costs that may come from the housing finance companies. Prepayment penalty is undoubtedly one of the most expensive hidden costs encountered by borrowers. Home loan companies that charge this penalty should be avoided if one expects to prepay the loan due to increased cash inflows in near future.

Moreover, most Companies do not pay for the technical valuation report of the property while others insist on a registered mortgage that will increase costs of taking the loan. The onus is on reading the fine print in the loan document and seeing through the maze of exciting offers.