Home Loan is the most affordable means to realize your dream home. Banks charge a percentage on the amount funded as interest. Interest rate in Home Loan refers to this annual percentage (APR) which the borrower needs to pay.
Loans are obtainable from various institutions at attractive rates. Banks propose two types of rates namely fixed rate of interest and floating rate of interest. Though tough it is the most vital judgment for the customer to choose the appropriate scheme while availing home loans. It allows the repayment in fixed equal monthly installments (EMI) over the entire tenor of the loan as it does not change with market fluctuation. A certain percentage of the principle amount is settled and this remains steady for the complete tenure. Floating interest rate also termed as Adjustable Rates refers to interest rate that depends on market and varies according to economic state of the country.
Media reports on banks raising interest rates due to inflation might direct you to opt for fixed interest rate, but in reality, this might not be a good choice. Keep in mind that banks do have the authority to revise the rate because of unforeseen alteration in the money market condition even during the period of agreement. It is therefore essential for the applicant to go through the loan agreement methodically and then fix on the interest scheme. In general floating rates for home loans are cheaper than fixed rates.
Banks however provide customer the option of switching the rate scheme by paying a switch fee any time during the loan tenor. Every financial institution has their own pricing for home loans, land loans, LAP. The interest rate is determined by the bank on the basis of the PLR (Prime Lending Rate). Any change in base rates, will automatically apply to the old customer as well as new customers without any discrimination.
The rate offered by the institution depends on customer's job profile, builder profile, residence location, type of home loans opted for, relationship with the concerned financial organization etc. Banks line interest rates in various ways (ex. monthly reducing rate, flat rate), so just looking at the rate alone one might not get a true picture of which loan quote is the best. Banks do offer housing loans to NRI clients as well, but the rate offered to them is different from that of general customers. RBI has banned lending below Base rates barring restricted categories such as employee loans, loan against fixed deposits etc.
To guarantee that our customers get the unsurpassed interest rate we in Moneylaxmi have consolidated all the information associated with the topic along with current rate of interest for all the banks at one place.