Know your rates before you borrow.

House Loan Interest Rates: Create a Space of your own with HDFC Home Loans. Best housing loan interest rates for women and salaried individuals. Apply now!.

Why you should choose a floating house loan interest rates.

Probably one of the biggest dilemmas borrowers face whilst taking a home loan is choosing between fixed and floating interest rates. This is a debate as old as time and has haunted potential borrowers even before the loan application is made. Both fixed and floating rates afford borrowers their own set of pros and cons, and both are designed to suit different types of financial needs. This article will discuss some of the advantages a potential home-loaner stands to gain from with a floating type of interest rate.

It’s lesser than fixed rates!
House loan interest rates are probably one of the most daunting elements of the borrowing procedure. This is why the first and most important advantage of floating rate is that it’s always less than fixed interest rate. This is why most borrowers opt for this rate. With a floating interest rate you stand to receive an interest rate that would be at least 1-2.5 percent lesser than a fixed type of interest rate.

Second benefit; you stand to gain from unexpected drops:
To begin with, your interest rate is already less than that of a fixed interest rate. Now to add to this, if the market fluctuations or government policies call for a lowered base rate on the existing house loan interest rates, then those who have opted for a floating interest rate will stand to benefit even more.

Scope of savings:
Even if the floating rate stays the same, you stand to save a lot in comparison to opting for fixed house loan interest rates. And if the market fluctuates or government policies change in your favor, then you stand to save even more. Thus floating rate of interest affords you the scope to save a substantial amount of money.

Even the rates rise, it is okay!
Floating rates are anyways cheaper than opting for a fixed interest rate when the market is stable. But even in case the floating rate rises to match of the fixed rate, since house loan interest rates are cyclical, it will eventually fall over the tenure of your loan. Let’s take an example to better explain this, say you get a floating interest rate of about 11.5% while fixed interest rate is at 14 per cent, then even if the rates rise over a couple years by up to 2.5 percentage points, you’ve still saved in the initial years and when the rates fall again, you’ll again invite savings!

Should you choose a floating interest rate?
Well, considering all these advantages, if you think the market will remain constant over the tenure of the loan, then it’s a good decision to go in for a floating interest rate. What’s more is that if you have taken a short tenure for your home loan, then the chances of the rate rising above those of the fixed rate are less and so it makes sense to go for a floating interest rate if you have short tenures. But ultimately it boils down to risk appetite, if you are able to read the markets and predict a fall or no rise in the rates, the floating rate of house interest is ideal for you!

Why take a home loan even when you have sufficient funds.

Home Loans Interest Rates: Create a Space of your own with HDFC Home Loans. Best housing loan interest rates for women and salaried individuals. Apply now!.

Home loan interest rates explained.

Just like choosing your dream home, which involves so much of thought; choosing home loans interest rates too is no easy decision. And just like the type of home varies from person to person, your home loan interest rate too depends on certain parameters that vary from person to person. This article will aim at giving you a crash course on home loans interest rates, how they’re determined and their types.

So how is your home loan interest rate determined?
Your home loan interest rate is something that isn’t fixed, it isn’t a rigid number. It varies basis a few parameters. These parameters include your credit score, which is an overall report of credit history. If you’ve missed credit card payments or defaulted on previous home loan EMIs then you will have a lower credit score and a higher interest rate. Whereas if you have paid your credit bills and loan EMIs in a timely manner, you will have a higher credit score and a lower interest rate.

Another factor to influence the interest rate is the loan amount, higher the loan amount, higher the interest rate. Next on the list of factors that influences your interest rate is the amount of down payment you put down, higher the down payment, lower the risk you pose to a lender, and the lower the interest rate levied on you will be.

Next is the tenure, longer the tenure higher the interest rate, whereas shorter tenure will generally invite lower interest rates.

The last factor influencing the interest rate you receive is they type of interest rate you choose to go with and this will bring us to the next part of this article, types of interest rates:

What are the kinds of interest rate to choose from?
When it comes to home loans interest rates, one size doesn’t fit all. That’s why financial institutes offer varying kinds of rates. But broadly there are three types of home loans interest rates out there, namely, fixed, floating and semi-fixed interest rates.

Looking for certainty and security? Opt for fixed interest rates.

Fixed, as the name suggest, entails an interest rate that will remain the same over the entire period of your loan tenure. This kind of home loan interest rate offers recipients the scope to plan their finances better and adds an element of foresight and structure to the home loan process. The disadvantage though with fixed home loans interest rates is that fixed rates are usually higher than floating rates at any given point. And say if there is considerable market growth or change in government policy that lowers the interest rates on home loans, the fixed rate home loan will never see the benefit of these reduced rates.

Don’t mind a little risk to avail greater savings? Opt for floating interest rate.

The floating home loans interest rates starts of lower than the fixed kind of interest rate. With the floating interest rate, the base interest rate stays the same but the floating element may fluctuate over the period of your home loan tenure based on the current market scenario or government policies. If the overall market scenario seems good and stocks are on the rise, your interest rate will tend to fall. So, in the case of long term term loans, of say 20 years, if the signs point towards overall market growth and development, choosing a floating scheme will see your interest fall over the years, which even if it is marginal, adds up to a substantial amount of savings. The disadvantages with the floating home loans interest rates is that, with varying monthly installments, one cannot budget their repayment structure systematically and also there is the fact that falling market scenarios or change in government policies may see the rise in your interest rate.

Medium tenure loan and fixed income? Then opt for semi-fixed home loan.
The semi-fixed home loans interest rates are a combination of fixed and floating rates. With the interest rate remaining unchanged for a specified period of time, after which, the rate of interest is converted to floating. This is ideal for medium term loans and for individuals who don’t expect their income to grow over the period of the loan. The advantage with the semi-fixed interest rate is that it is ideal for a situation when the interest rate in expected to rise and then fall.

It is wise to consider all your option, weigh your own financial situation against these options and then accordingly choose a loan interest rate that suits your needs. And it goes without saying, that the choice is one that requires a great deal of thought and contemplation. We hope this article has been of some help and all the best.

How is your home loan interest rates a deciding factor?

House Loan Interest Rates: Create a Space of your own with HDFC Home Loans. Best housing loan interest rates for women and salaried individuals. Apply now!.

Why purchasing a house with a home loan is better than renting.

Many potential home owners are torn between renting and owning a home. Some people advocate that renting is better while some say the owning a home is the best. And with the cost of property shooting through the roof in Indian metro cities, making the right decision and choosing the ideal option becomes of paramount importance.

There is one particular tool that can help tip the scale in favor of ownership and this tool is a home loan. With a home loan you can easily own a property, live with pride and give your family a place to call their ‘home sweet home’. Read on and find out just how beneficial a home loan is when opting to purchase a property of your own.

To begin with, a home loan allows you to be a home owner with just 20 to 30 percent of the fund required to purchase a property. This is because most leading lenders provide up to 80% percent of the funds required to buy a home. This means you can become a home owner with a very minimal initial payment.

People think that the home loans interest rates and the EMIs will put a huge financial stress on their financial standings. However this is not true, if you’re already renting, you’re anyways throwing away money, with a home loan you just have to redirect this rent allowance to your principal repayment. As far as home loans interest rates are concerned, it is common practice for landlords to increase the rent periodically, this could equal the amount of interest you end up paying.

If that’s not enough to change your mind, then consider this. Under section 80C of the Indian Income Tax Act, 1961, the principal repayment amount can be used to avail deductions from your taxable income subject to maximum cap of Rs. 1, 50,000. That’s not all, under section 24 of the Income Tax Act, repayment of the home loans interest rates can also be used to avail tax deduction to a tune of up to Rs. 2, 00,000.

So, if you were one of those individuals steering away from this financial instrument because you were worried about the burden of EMIs and home loans interest rates, it’s time you applied for one. Because not only do these costs somewhat equal the cost of renting & inflation, they also help you save a substantial amount of taxes.

You are also afforded a good amount of flexibility with a home loan. You can choose a long or short tenure, depending on your needs. A longer tenure will have lesser interest rates. If interest rates aren’t a problem for you, you can opt for a shorter period and finish the loan repayment quickly. You can even choose from two or three different types of home loans interest rates, i.e. fixed, semi-fixed and floating. Each of them serves different purposes and needs; you can choose one that suits your requirements. You can also make prepayments, but some lenders may levy a charge on such payments.

A home loan will help you make a great investment. If you opt for a loan in your mid-twenties, chances are by the time you turn 45, the home would be in your name. And by then its value would have appreciated considerably too, making it a great investment.

Owning a home through a home loan will give you the feel of financial success and will serve as a symbol of accomplishment. Your family members will have a space of their own and you won’t have to be under the control of a landlord.

If you’ve been planning to own a home, consider a home loan! It’s one of the easiest ways to make the dream of ownership come true. Speak to a financial advisor today and discuss how a home loan can benefit you.

Something you need to know about housing loan interest rates.

Are you planning to buy a home at a price you can manage? Then with the ascending property prices, it is wiser to take the decision sooner. The financial organization lends you the required money at floating or fixed rate of interest. House loan interest is the extra amount you pay the financial organization for providing you the financial support. The rates at which different financial organizations provide the housing loan amount are variable in nature. The experts suggest the borrowers to visit some common aggregator and understand the lowest rates available in the market and then move ahead.

The rate of interest depends on the principal amount; the customer is borrowing from the institution for the purpose of buying an immovable property. The interest rate varies with different slabs, like: up to Rs. 35lakhs of principal amount you have to pay 8.7-9.1% per annum interest rate and for above Rs. 75 lakhs slab the organization punches a rate of 8.75-9.25% per annum. The banks and NBFCs provide a concession of 0.05% on the present rate of interest to its women customers.

There are three kinds of interest rates that the organization provides: fixed rate of interest, floating/adjustable rate and tru-fixed rate of interest. The rates are subject to change during the time of disbursement.

In the fixed rate of interest the customer borrows the 75-90% of the property value at a current fixed rate. The rate is constant for the whole loan term, irrespective of the financial health of the market. For example if the interest rate increases from 0.5-1%, then the customer gets the advantage and the lending institute bears the burden. Similarly if the rate decreases then the customer has to pay the same rate of interest at which he/she has taken the loan.

In floating/adjustable rate of interest, the house loan interest rate fluctuates. With the booming property values and inflation smitten interest rate, people were on the verge of getting dumped under debt pressure. Thanks to the floating rates. From 9-9.5% the rates have come down to almost 8.7-9.1%, this act as a buffer to the customers with old interest rate. Now they can save quite a lot of money, for the wintry days both in financial and personal life. So the floating rate changes depending on the market condition and customers can earn the benefit.

In truFixed rate of interest in house loan interest, the customer has to pay a fixed rate of interest for 2/3^rd years of the tenure after that the rate switches to floating rate.

Considering the market condition the customer may switch from a fixed rate plan to floating rate plan. They may have to pay 2% of the balance money if the switching takes place before completion of 60 months of the total tenure.

The customers have to pay to pay the EMI monthly against the balance for as long as 30 years. With sufficient money they may close the loan account with pre-payment of the loan amount. The institute doesn’t punch any penalty for the pre-closure.

With so many options available at the finger tips, you can very patiently and wisely choose your financial organization to suit your purpose and purse. The best organization will be the one that will provide you maximum money for a longer tenure at a low rate of interest. So tighten your belts, dive into the home loan mission and don’t stop till you are debt free.