There are a host of reasons for why a borrower decides to opt for a home loan. It can be for buying a house, a flat, renovation, extension or even repairing the existing house. Today, both banks and other financial institutions such as Non-Banking Financial Institutions, Housing Finance Companies are in a stiff competition for providing the best interest rates on a home loan. A borrower becomes eligible for a home loan after a few checklists carried out by the lender like your credit score, assets, current monthly income, etc. An applicant needs to note that the quantum of home loan is dependent upon your choice of tenure (usually in months), home loan interest rate as it determines your monthly outflow. In addition to this, there are some other eligibility criteria too which need to be passed for home loans. However, it is advisable to seek clarifications in regards to your home loan interest rates from a lender.
There are two types of home loan interest rates- one is fixed and another is floating.
Fixed Home Loan Interest Rate: A fixed interest rate home loan is a loan where the interest rate is fixed over the entire tenure of your home loan. The interest rate doesn’t change with the market fluctuations. In a fixed home loan interest rate, the earlier part of the loan tenure is used to service the interest accrued while the later part is used to serve the principal part of the tenure. So, if you have opted for a pure fixed home loan interest rate, your monthly EMI due to the lender would remain constant. If a lender offers a home loan which is fixed only for a certain period of the tenure, you can ask to elicit information from the lender that whether the home loan interest rates, may be raised after the period (reset clause). A borrower has the right or privilege to negotiate a lock-in that includes the home loan interest rates in which you have agreed upon initially and the period lock-in lasts.
Floating Home Loan Interest Rate: In such loans, the rate of interest varies according to the market conditions. In this, home loan interest rates are tied to a base rate and have a floating element. So, if the base rate is changed, i.e. reversed upward or downward depending on the fluctuations in the market conditions, the home loan interest rate is also revised accordingly. So, meanwhile if you choose floating home loan interest rate, they come in two parts: one is index and the other is spread. An index is basically a measure of home loan interest rates, whereas the spread is that extra amount which the lender adds to cover the credit risk, profit mark-up, etc. The amount of spread in it may differ from one lender to another, but it is usually constant over the entire span of a home loan.
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Compare Best Home Loan Interest Rates
Apna Loan facilitates you to compare some of the best home loan interest rates offered by the banks to its customers in India. With the comparison table, you can fetch out a best deal on the home loan interest rate and can save money for the down payment and for other expenses. The normal range of home loan interest rates starts from somewhere around 8.55% p.a. So, check and compare your home loan interest rates at ApnaLoan and get your dream home sooner than you expected.
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Bank Name
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Interest Rate
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8.30%
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8.35%
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9.80%
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8.45% – 9.50%
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8.50%
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8.75%
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8.35%
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8.35%
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9.35%
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8.35%
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8.85%
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8.60%
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8.90%
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8.50%
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8.65%
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8.55%
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9.35%
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9.90%
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8.75%
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8.55%
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8.60%
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8.60%
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9.40%
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8.70%
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8.65%
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8.75%
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10.30%
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9.45%
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9.55%
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8.75%
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8.75%
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8.70%
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Benefits of Fixed Home Loan Interest Rates
Today, getting a home loan has become easy because of digitization. However, choosing the best home loan interest rate is always a complex aspect. Well, most of the financial pundit’s advice borrower’s to do proper homework before rushing into something. While applying for an online home loan, the first thing that will bother you is whether to go for a fixed home loan interest rate of the floating one. You can compare home loan by going through the pros and cons of the interest rates on a home loan.
- It brings a sense of security and certainty,
- The home loan interest rates remain fixed irrespective of market conditions.
- Usually, a fixed home loan interest rate is excellent for the ones who are really good at budgeting and can manage a fixed monthly repayment schedule, i.e. doesn’t fluctuate and easy to budget.
The drawback of Fixed Home Loan Interest Rates
The major and only drawback of fixed home loan interest rates is that they are usually some percentage points higher than the floating. Apart from this, if for some reason the rate of interest decreases, the borrowers who opted for fixed home loan interest rate doesn’t get the benefit of it, and one has to repay the same amount every time. In addition to all this, another area of concern is whether the fixed home loan interest rate is fixed for the entire tenure or only for a few years? One has to cross check with the concerned lender while applying for an online home loan. Well, many financial gurus agree on the fact that fixed home loan interest rates are a better option if the economic scenario sees a jump in the interest rate in the near future.
Benefits of Floating Home Loan Interest Rates
The biggest benefit of the floating interest rate is that they are cheaper in comparison to a fixed home loan interest rate. So, even if the floating interest rate goes over the fixed rate, it would be for some period of the loan tenure, and not for the entire. The interest rates would fall over a long period, and thus, the floating home loan interest rates bring a lot of savings.
Drawbacks of Floating Home Loan Interest Rates
Their uneven nature! Yes, the major drawback of floating home loan interest rate is the uneven nature of monthly installments, which makes it really difficult sometimes to manage. If there is a huge hike in the floating home loan interest rates, the borrowers had to shell out some extra thousands every month for their home loan EMI’s, throwing your entire budget out of order.
Parameters on Which Home Loan Interest Rate Depends
There are 3 basic criteria’s on which the home loan interest rates largely depends and they are:-
Loan Amount: Home loan amount would decide the interest rate, a borrower going to pay. More the loan amount, the lesser would be the interest rate.
Monthly Salary: Higher your monthly salary, lower would be the home loan interest rate.
Loan Opted For: Women borrowers have a fair deal in this! Female borrowers can enjoy a lower rate of interest on home loans. In addition to this, it is generally advantageous to take a housing loan online, as it allows the one to get tax exemptions.
How to Apply
You can apply for home loan by contacting or visiting the branch physically or by the online mode. Applying home loan online, through Apna Loan can improve your chances of getting best loan rates, low processing fees, and special offers, deals (if any). Once you compare home loan, among different lenders, you can proceed with the one which suits your budget. After this, the lender will collect your documents and initiates the further process which includes checking your Credit/CIBIL score, the market value of the property, technical and legal checks of property. On the basis of the evaluation, the lender will give a decision.