A home is a place where the times spent today become beautiful memories that are cherished forever. But, how many people are able to buy a home without a loan? Not many and that’s fine. We are living in a time when dreams are expensive and when you have top lenders offering home loans at a rate within your budget, everything seems sorted.
Flexible & Extended Repayment Options
Home loan interest rates and processing fees are vital and so is repayment. Yes, the maximum time you can get to pay the loan is 30 years. But all that is subject to your age. While some lenders keep the loan running for the time you attain the age of retirement i.e. 60 years, others keep it for the time you become 70 years old.
Scope for Increased Home Loan Eligibility
The home loan quantum is dependent on your income and repayment capacity, besides the value of the property you are looking to buy. In case the home loan eligibility comes less based on your income and repayment capacity, you might struggle to buy a home on your own. So, if you can add an earning co-applicant, the loan eligibility will enhance and boost your chances of buying a dream home.So, which lender is offering you the maximum based on your as well as the co-applicant’s income? Check that and decide accordingly.
Fee Payable on Rate Conversion
As you would know the home loan is basically offered on a floating rate. But some borrowers are servicing the loan at a fixed rate basis too. Fixed rates can be 3%-4% above the floating rate and can make you pay more by the time the loan wraps up. You need to check the lender that charges less on converting the fixed rate into a floating rate. If we come to the floating rate system, housing loan interest rates are benchmarked to base rate, MCLR and RLLR.
RLLR-based home loans have followed the policy rate changes by the RBI in the same proportion. Now, as the RBI is on a rate cut spree by slashing the repo rate by 100 basis points from October 2019 (including the massive 75 basis point cut made by it on March 27, 2020), the RLLR-linked loans have fallen by 100 basis points i.e. 1%. This makes it the cheapest of the three. If you speak of the MCLR-based loans, the rate has come down to the tune of around 60% to the policy rate changes. Base rate reductions are even lower. But the RLLR-based home loans are the newest, so many of you may be servicing home loans under MCLR and base rate. So, if you wish to convert that into RLLR and enjoy the benefits of lower interest rates, check the fee that your lender is charging. If that is higher than what prevails in the market, you can think of a home loan balance transfer to the lender that is charging less.
Check Prepayment Norms Carefully
People do prepayment either in full or parts to reduce the interest obligations. Usually, floating rate loans don’t come with charges on part prepayment. But there could be some lenders which will charge on part payment of a floating loan too. If you happen to be servicing your loan there, the joy of part payment could reduce to a degree. But, if you are yet to take a home loan, read the terms and conditions pertaining to part payment and act accordingly. Full prepayment comes with no charges if you do it from your own resources. But if you do via a balance transfer, lenders can deduct applicable charges. Fixed rate loans, on the other hand, have charges on both part and full prepayment doesn’t matter if you do from your own sources or via a balance transfer.
Check for special offers on home loan interest rates and processing fees if you are about to take a home loan. Lower interest rates can be the case if you already hold a relationship with the lender you are looking to take a loan from. Also, if you are working in a reputed MNC or any top rated firm, you can get special rates on your home loans. There could be processing fee waivers too. But that will be for a limited period.
Lender Can Offer You the Best Home Loan Rate Based on Your Good Credit Score
A credit score may not hold relevance as far as getting the approval for a home loan is concerned, but it does influence the interest rate of this loan type. If you have a good credit score of 750 and above, the interest rate will be quite low and help keep the EMIs lower. Top lenders, including SBI, ICICI Bank, HDFC Limited and LIC Housing Finance, are offering home loans at lower interest rates to individuals having a good credit score. However, the score criterion for the lowest rate changes from one lender to another.