A Complete Guide To Understanding Home Loan Interest Rates
Home loan rates can be a complicated plateau to manoeuvre through. There are, however, a few major factors that do stand out. This guide should help you to screen through the major sections that need to be kept in mind about this subject:
Types of interests
This section may seem basic; however, it’s not. There are three types, obviously. Yet, you need to know some of the important aspects that may affect your EMIs and the repayment structure in the long run.
• Fixed rates: These rates are higher and so are the hikes after the first few years. So, you should know when your interest rates will elevate again. If you opt for fixed interest rates, you should aim to increase your earnings accordingly.
• Floating rates: These are vulnerable to economic fluctuations. They can work in your favour if they lower over a certain period of time, though you must know that the tenure for home loan repayments stretches from 20 to 30 years. Unless you earn a significant income over the course of the years to pre-pay the loan, you will be paying EMIs for that duration and may also face unexpected recession and interest rates hike twice or thrice in that period.
• Hybrid rates: These rates combine the best of fixed and floating. You make two home loan agreements that divide your home loan into two types of interest rates and repayment plans. Though it seems like the best of both worlds, you need to understand that it can backfire too. You need to read the home loan agreement papers and the fine print carefully and protect yourself against any backfires.
The factors that influence your home loan interest rates:
All applicants may not be able to get the advertised rates. Very few people, in truth, are in a position to avail the best home loan rates in India. Although you can influence home loan proposals to get the best possible interest rates for your housing loan. So, what are these factors?
• CIBIL credit score
• Repayment ability
• Company appraisals
• Employer
• Annual earnings – income, assets and liabilities
• Any other loans
• Your interest rates negotiations
There are always more factors that can come into play, depending on how you choose your house loan package. So, it makes sense to make an effort to mould all these factors in your favour. It is not always possible to transform them all; yet, if you take an expert’s advice and use it to your advantage, you can potentially get much lower housing loan interest rates in India .
