The interest rate levied on housing loans varies from one lender to another. It might as well vary according to a borrower’s eligibility. In 2020, the interest rates applicable for home loans were slashed by 40 basis points. It became as low as 7%, which is the recorded lowest rate in the past 15 years. Current home loan interest rates range between 6.70% to 12% annually.
Interest charged on a home loan is the primary factor which determines the cost of borrowing. Given the fact that home loans are long-term credits, availing it at higher interest rates could prove difficult for borrowers. It might have long-drawn consequences as well, leading to debt. As a prudent borrower, you need to go ahead with a lower housing loan interest rate. This would also bring down the EMIs, reducing your monthly liabilities.
Before selecting the ideal lender for a home loan, you need to compare the interest rates being charged. But even before that, you must have a thorough knowledge regarding home loan interest rates, its mechanism, function, types, etc.
Types of interests applicable on housing loans
A good idea before availing a housing loan would be to go through the guide for getting better home loan interest rates. This guide would educate you regarding the current home loan interest rates and its types. Given below are the two types of interest rates levied on housing loans:
- Fixed interest rate
Fixed rates of interest are also called flat rates of interest. These are such rates which remain the same throughout the repayment tenure. Unlike floating interest rates, these rates remain unaffected by market conditions. It is wise to opt for fixed rates if the current home loan interest rates are convincingly low.
- Floating interest rate
Floating rates of interest are also referred to as variable rate of interest. As its name suggests, these rates keep fluctuating as per market changes. Payable interest component of home loan is also likely to increase or decrease according to these fluctuations.
Borrowers must choose the ideal type of interest rate on a home loan based on the current market trends. However, if the interest charged on an existing loan seems too steep for a borrower, he or she can opt for a home loan balance transfer to reduce the EMIs.
Another notable point which borrowers must keep in mind is that loan interest rates are not the only charges levied on housing loans. Various other charges like processing fees, foreclosure charges, prepayment charges, loan statement charges, principal and interest statement charges might also be levied on a home loan. But there are certain HFCs (Housing Finance Companies) which charge no such fees on housing loans. Opting for such companies would help you avail a more affordable home loan.
Some of the reputed HFCs also extend exclusive benefits to the customers. Pre-approved offers are a great example of this. These offers are applicable on various financial products and services. Borrowers get to experience a simple, hassle-free, and faster application procedure through these facilities. You can instantly check your pre-approved offers by entering your name and mobile number.
Although there is no rigid way to avail a low housing loan interest rate, there are certain tips which could help you avail better interest rates on loan. For example, maintaining a good credit score (750 or above) could help you convince the lender to provide you a home loan at a cheaper rate. Apart from this, availing a joint home loan could also assist you in getting affordable current home loan interest rates.
