Home loan interest rates are probably the most important factor of a housing loan. They play a large role in deciding the EMI you pay every month. Therefore, if you plan on applying for a home loan, you must do so only once you are fully aware about every aspect of the interest rates. This article will help you in this regard by highlighting 5 of the lesser known factors of housing loan interest rates.
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1. There are 3 different types of interest rates.
Fixed, floating and semi-fixed are the types of home loan interest rates you can choose from. Many borrowers aren’t aware of this right until the lender asks them to choose between the three. We’ll give you a heads up and ensure you go into the application fully informed and ready to make the right choice. So, fixed rates will never change. They remain constant irrespective of market fluctuations & changes in the RBIs rates. This is good if the rates go up and you want stability to plan your repayments. However, you will not enjoy the benefits of a drop in the interest rates, moreover, fixed rates a little higher than the rest. Then there are floating rates. These change as per market scenarios. Therefore, they could go up or fall lower during the repayment tenure. Also, these rates are lower than fixed rates in the start. Most experts suggest borrowing with these rates as they expect home loan interest rates to fall further in the future. Lastly, there are semi-fixed rates – they stay fixed for the first few years and turn in floating rates later.
2. Women get lower rates, and you can too!
Confused? Well, women get lower rates – they are provided with a concession of 0.05%. However, you can also enjoy this benefit, despite being a man. All you have to do is co-borrow with a woman. Yes, it is as simple as that; just add your wife, mother, sister or daughter as a co-borrower. Name them as a co-owner of the property as well and you could also enjoy slashed stamp duty rates.
3. You can avail subsidies:
Yes, you can avail an interest rate subsidy and save up to Rs. 2.67 lakhs on your home loan! This is all thanks to the Pradhan Mantri Awas Yojana Credit Linked Subsidy Scheme (PMAY CLSS). You can avail this benefit as long as your combined household income does not exceed Rs. 18 lakhs annually.
4. Tax deductions are applicable to all co-borrowers.
Sure, we all know that the interest paid on a home loan can help deflate your taxable income and bring down the amount of tax payable. However, did you know that every co-borrower can avail this benefits?
Just as long as they are co-owners of the home or property, they can! This is an amazing way to help you & your loved ones avoid paying huge amounts of tax. We hope these pointers on home loan interest rates can help you tackle the same wisely and use them to you advantage. Good luck and congrats on your new home!