In this current scenario each one of us wants to buy our home, however, purchasing it is not a simple job. Because taking home needs a lot of financial investment. In prior days people used to take money from friends or family members else borrow finance from traditional financers at exorbitant interest rates and hardly any time for loan repayment.
However, with the introduction of customized home loan, it has become quite easy for people to purchase a house for themselves. The entire crux of taking the home loan is the rate of interest on it. A slight increase or decrease in home loan interest rates will change the value of your installments.
In India, some leading private finance companies offer home interest rates such as fixed rates, floating rates or partially fixed rates. Different banks or finance companies offer different home loan interest rates on housing finance. The rate of interest varies based on the quantum of the loan, period for which the loan is taken for, etc.
It becomes important for the customers who wish to avail home loan with a low rate of interest so that they could save on their monthly installments. The interest rate for most home loans is linked to the lender’s base rate. And it is decided by the banks or finance companies based on the Reserve Bank of India guidelines.
When you’re applying for a home loan, it becomes important for you to compare the offers given by various lenders. You should compare the home loan interest rates, tenure, repayment options, monthly installments, processing fee, pre or post penalty charges, etc. Today, many lenders are providing online quotes and calculators on their sites to give an exact scenario for what your home loan looks like.
You can get the loan eligibility, monthly installments, tenure and the incurred costs on the total home loan. Also, on a safe side, you can take advice from experts such as loan counselors or mortgage agents. It’s essential to find such expert who will offer sound advice for people on their best interest rate deals.
The government of India has introduced a new credit linked subsidy scheme named a Pradhan Mantri Awas Yojana (PMAY) that will help you to get interest rate rebate under Credit Linked Subsidy Scheme for Middle Income Groups – CLSS (MIG). So, a middle and lower-middle-class section of society can save up to Rs 2.67 lakhs on the total loan amount.
The relation between interest rate and tenure is important. If you opt for higher tenure you will have to pay more interest rate and you will get lower monthly installments and if you opt for lower tenure you will have to pay less interest rate but the monthly installment would be higher.
Home loan refinancing is a great way to lower down your interest rate and the total costs on your housing finance. If some other finance company or lender is offering you low-interest rate it would be a safe bet to choose that road. The reason to offer you low rate would be good credit history, repayments on time, targeting new customers by the lenders.
A golden tip: Whenever you are in the middle of paying monthly installment any perks or increments should be diverted towards making pre-payment as it will help you lower down the interest rates and the overall costs of your housing finance in the long run.