For new and future borrowers, the term ‘interest rate plays a key role in the repayment of your loan. The interest rate defines the value of your equated monthly instalments (EMIs). If you intend to take a home loan from a financial institution, knowing the current interest rates being offered for home loans will be useful.
Becoming a homeowner is a common goal shared by everyone, regardless of financial status. Unfortunately, due to the recent surge in inflation, fulfilling this desire is now becoming impossible.
Taking a home loan from a commercial bank or Non-Banking Financial Company (NBFC) is a chance to realize your dream, but which lender do you fancy? One of the parameters for rating a lender’s terms and conditions is the interest rate they offer. We advise that you always opt for the lender offering low-interest home loans.
As you prepare for your home loan application process, read on to learn more about the current home loan interest rate.
What is a Home Loan Interest Rate?
This refers to the percentage of the principal amount that the lender charges the borrower for availing himself or herself of the principal amount. This is an important component of your loan, as the percentage that lenders charge you for taking a loan defines what you’ll repay in EMIs. Although the interest rate on housing loans is similar to the repo rate, it varies from lender to lender.
Types of Interest Rates for Home Loans
There are two known kinds of interest rates that you can opt for. They are:
Fixed Interest Rate
For this interest rate, you do not witness any fluctuations in the interest value. This stability continues to the loan tenor’s end. Although you can choose to move to the floating interest rate, this is dependent on if your lender allows it.
Because the fixed interest rate is unchanged, you are aware of what you will pay as interest for the loan tenor. This means no sudden fluctuations will affect your loan, helping you to save money in the process.
If there is any drop in the interest rates, you do not enjoy it due to the nature of your rate system.
Floating Interest Rate
Here, your interest rate can change anytime because it is bound to the current repo rate. The repo rate is set by factors, such as the Reserve Bank of India’s monetary policy and occasional revisions of the lending rate.
You stand a chance of paying less than expected to service your home loan. This occurs when the rates plunge.
One shortcoming is that when the rates rise, you will have to pay higher to meet up with the increased EMIs.
The Current Home Loan Interest Rates in India
Interest rates vary from lender to lender and at the moment, the rates charged for taking a home loan in India range from 6.70% to 12%.
Ways to Take a Low-Interest Home Loan
A high-interest home loan will burden you, especially if you have other expenses to cover. So, if you would like to get a high-value loan for less, read on.
- Opt for a Short Loan Tenor
Although you pay low EMIs on a long-term home loan, the general value of the loan grows because you are paying the interest charged over a long period. Opting for a short tenor ensures that the interest value decreases. To make a well-informed decision, we recommend using our home loan interest rate calculator.
- Consider Making Prepayments
With this option, the bulk of your repayment prioritizes the interest over the principal amount for the loan’s initial years. Making frequent prepayments on your housing loans guarantees that you lower the principal amount and by extension, the interest.
Take a Housing Loan at a Low-Interest Rate Today
These days, lenders are offering high-value home loans to salaried individuals and professionals at interest rates starting at as low as 6.70%. So, use the current situation and offers to your best advantage and apply today.
Now is the ideal time to make a home loan to buy a property. The Reserve Bank of India has decided to keep the repo rate unchanged at 4%, which has led to lenders being able to offer home loans at historically low-interest rates. So, make the best use of the current scenario and become a homeowner.