Someone promises “the lowest rate in the market” and asks you to sign before you see the full cost. That pattern shows up often on property-backed loans of ₹5 crore and above. Here are the red flags I watch for after 20 years on the bank side.
That is mis-selling: selling a promise the seller does not control.
For most of my 20 years of experience in credit and lending I sat on the lender’s side of the table, in credit roles across home loans, Loan Against Property (LAP), mortgages and working capital. I saw this problem from the inside. Files reached my desk with borrowers expecting terms that the bank’s pricing policy could never give their profile. The bank’s credit team did not create that gap. It was created in the first conversation, long before the file reached credit.
Most people who arrange loans do honest work, and the red flags below are about behaviour, not about any particular person or firm. One flag on its own may have an innocent explanation. Two or three together mean you should slow down before you hand over anything.
1. A rate is quoted before anyone has seen your papers
Your interest rate is not a number someone picks. Banks price off an external benchmark (for many loans, a repo-linked rate) or their MCLR (a bank lending rate), and NBFCs off their own reference rate, then add a spread. The spread depends on your credit history, income, the type and location of the property, the loan-to-value, the loan size and the lender’s appetite for your segment that quarter. Nobody can tell you your rate on the first phone call.
Ask instead: “What range do lenders usually offer a profile like mine, and what would put me at the top or the bottom of it?” A real answer comes with reasons. A rate becomes a commitment only when it is printed in the lender’s sanction letter and its Key Facts Statement (KFS).
2. “Lowest rate”, “guaranteed approval” or “I have a setting in the bank”
Sanction is a credit decision, taken by people with delegated powers and, for larger loans, by a committee. When I approved exceptions to policy, it was because the file brought written safety steps with the request, never because someone knew someone. No contact can override a lender’s credit policy, and anyone who claims otherwise is selling, not advising.
Treat the words lowest, guaranteed and confirmed as warning lights when they come before a sanction letter exists.
3. They want your original property documents now
At the assessment stage, a lender works from copies: the title deeds, parent documents, encumbrance certificate, patta and approved plan. The lender’s lawyer may ask to see originals during legal verification. That should happen with the lender’s representative, with you present, and the originals should come back to you. They are deposited with the lender, not with an intermediary, usually when the mortgage is created, and you should receive a written acknowledgement that lists every document.
There is a reason this matters. For personal loans, including home loans, RBI requires lenders to release original property documents within 30 days of full repayment and to compensate borrowers for delays. For any loan, the lender’s written acknowledgement is your record of exactly what it holds. Those protections run against the lender. They do not help you if your originals are sitting in someone else’s office.
If you are in Tamil Nadu, our guide to property documents: CMDA, DTCP, patta and EC explains what each document is for.
4. Cash, “login charges” or “file charges” paid to the intermediary
Processing fees, legal and valuation charges belong to the lender. Under RBI’s rules on the Key Facts Statement, which apply to retail and MSME term loans, the KFS must show the annual percentage rate (APR) including the lender’s charges, and fees not mentioned in it cannot be charged later without your explicit consent. Those charges are paid to the lender.
A legitimate advisory fee looks different: agreed in writing before work starts, with a clear scope, and invoiced. If someone asks for money to “log in” your file or “push” an approval, ask who the payment is for, why it is not in the KFS, and whether they will put it in writing.
5. No written timeline, only “15 days, sir”
A secured loan moves through stages: initial assessment, document collection, application, a personal discussion with the lender, legal and technical verification, the credit decision, sanction, documentation and disbursement. How long each stage takes depends on your property, your financials and the lender. A clean file with clear title moves faster. A property with an approval gap or a broken title chain does not, however confident the person on the phone sounds.
Ask for a written plan that shows each stage, what is needed from you and what depends on the lender. If dates keep slipping without reasons, that is information.
6. Your file goes to many lenders without your knowledge
Every formal application usually triggers a hard enquiry on your credit report. Several enquiries in a short period tell the next bank that you have been shopping your file around, and sometimes that others have declined it. I have read bureau reports like that and asked the obvious question: why did the other lenders say no?
Ask: “Which lender are you sending my file to, and why that one?” Give consent lender by lender. A considered approach to one to three lenders that fit your profile beats a blast to ten.
7. “Don’t worry, we’ll manage the income”
This is the most dangerous red flag on the list. Inflated returns, edited bank statements and invented rent agreements do not survive a credit process that checks returns, analyses bank statements, matches GST data and sends people to verify your business. When it is caught, the consequence falls on you as the borrower: rejection, a fraud flag, and possibly legal action.
Honest structuring is different. It means choosing a program that fits how your income actually shows up, such as banking surrogate or GST-based programs, or lease rental discounting for rented property, and explaining variances in writing before the lender asks.
8. Pressure to sign blank or unread documents
Do not sign blank application forms, blank letters or blank stamp papers, and do not sign anything you have not read. Every page you sign should be filled in, and you should keep a copy. Where a lender genuinely needs a signed document, such as security cheques under its process, it goes to the lender against an acknowledgement.
9. The sanction letter does not match what you were promised, and you are told to sign now
This is where the month-later switch shows up. The rate is higher, or it is “benchmark plus spread” with a spread you never discussed. There is a processing fee nobody mentioned, an insurance policy bundled in, or conditions you were never told about. And you hear, “Sign now, it will be corrected later.”
It will not. The sanction letter, the KFS and the loan agreement are the deal. Anything said on the phone is not. The KFS comes with a validity period, at least three working days for most loans, so use it to read the document properly. Check the rate and its reset frequency, every fee, insurance, the sanctioned amount and tenure, and prepayment terms. Under RBI’s directions on prepayment charges, for floating-rate loans sanctioned or renewed from 1 January 2026, many lenders cannot levy prepayment charges on loans to individuals and to micro and small enterprises. Whether that applies to your loan depends on the lender category, the loan’s purpose and its amount, so ask for it in writing.
10. They will not say who pays them, or always push the same lender
Intermediaries are often paid by lenders for the loans they introduce. That is normal and legitimate. Hiding it is not, because it can mean the recommended lender is the one that pays best rather than the one that fits you. Someone acting for a lender should also be able to tell you which lender, and show it.
Ask: “Are you paid by the lender? Which lenders do you work with? Why this one for my case?” And remember the rule that applies to every loan: nobody genuine needs your OTP, PIN or net-banking password.
A five-minute checklist before you hand over anything
- Have I been given a realistic rate range with reasons, not a promised rate?
- Do I have a written timeline, with what depends on me and what depends on the lender?
- Do I know which lender my file will go to, and have I agreed to it?
- Am I sharing copies only, with originals staying with me until the lender needs them?
- Is every fee written down, with lender charges shown in the KFS and paid to the lender?
- Do I know whether the person helping me is paid by a lender, and which one?
- Will I get time, and help, to read the sanction letter and KFS before signing?
If you think you have been mis-sold
Put your complaint to the lender in writing, through its grievance redressal channel and then its principal nodal officer, and keep copies of everything, including messages from whoever arranged the loan. If the lender rejects your complaint, does not reply within 30 days or replies unsatisfactorily, you can complain under the RBI Integrated Ombudsman Scheme at cms.rbi.org.in.
How I work instead
My practice is new, so I won’t show you a list of loans I have closed. What I can do is put in writing how I will handle yours: honest rate expectations upfront, a written timeline, no promises I cannot keep, independence from any single lender, a straight answer if your file is not ready, transparent fees, your originals staying with you, and a joint reading of the sanction letter before you sign. You can read them in full under our commitments, and see how we prepare a loan file the way a bank reads one.
This article is general information, not legal or financial advice. Regulations change; check the current RBI directions and your lender’s documents for your specific case.
Written and reviewed by CA Jitendraa Rathi, Chartered Accountant (CA membership number 217936) · Ex-banker, 20 years of experience in credit and lending · LinkedInLast reviewed · Expert review: CA Jitendraa Rathi (ICAI 217936)
Official sources: bank rates and rules change, so check RBI Sachet (check if a lender is registered), RBI complaint portal, RBI (repo rate and lending rules).