The Home Loan interest rate is the cost you pay for borrowing funds to purchase a home. It has an impact on the total amount and EMI.
The Home Loan interest rate varies from one bank to another. It also differs for each applicant as it is dependent on individual eligibility factors.
To secure the best Home Loan rate, choose a bank that’s fair and competitive, and also maintain a strong financial standing.
This blog explains how to compare bank offers based on their Home Loan interest rates.
Consider these points for comparing bank offers based on Home Loan interest rates:
- Interest rate type:
Home Loan interest rates are of two types: fixed and floating.
As the name suggests, the fixed interest rate remains fixed throughout the tenure. The floating rate is linked to external benchmarks; hence, it fluctuates.
The interest rate type affects the Loan predictability and the total cost; therefore, consider them when evaluating the bank Loan offers.
- Interest rate value:
Home Loan interest rates are the actual percentage the bank offers.
As mentioned, interest rates vary with each bank and applicant. Ideally, the lower the interest rate, the better. It reduces the cost of borrowing, making Loan repayment affordable.
The Home Loan EMI calculator is an online tool that helps you compare bank offers based on interest rates.
It provides an estimate of EMI and a total amount breakdown, giving you a practical understanding of how varying interest rates impact them.
Log on to any banking or financial website or mobile app to access the Home Loan EMI calculator free of cost.
- Interest rate type change clause:
By now, you know there are two types of Home Loan interest rates.
Most banks include a clause in their Home Loan offer allowing you to switch from fixed to floating or vice versa.
Ideally, opt for a bank offer which includes this clause. It allows you to adjust your repayment strategy according to changing economic conditions.
Reviewing your Loan offer under the guidance of an experienced banking and financial professional often helps you identify these and other essential clauses for your Loan.
Other factors to consider when comparing banks’ Home Loan offers:
Besides the Home Loan interest rates, there are also other factors to consider for comparing bank offers. Below is a mention of them:
- Loan amount:
The Loan amount is the total amount of funds the bank offers to you based on your eligibility and requirements.
Each bank follows a specific calculation method to determine a suitable amount for offering. Hence, the Loan amount each bank offers may differ.
Therefore, consider the Loan amount when comparing different Home Loan offers. Ideally, opt for an offer that provides you with a substantial Home Loan amount to meet your requirements.
- Terms and conditions:
A set of terms and conditions applies to your Home Loan from the start to the end, which includes how the disbursement will take place and the repayment details.
These terms and conditions differ for each bank and applicant. So, consider them before taking up a Home Loan offer.
Say “yes” to an offer with fair and advantageous terms and conditions. It makes a significant difference in the commitment journey.
- Fees and charges:
Various fees and charges apply for your Home Loan, such as Loan processing, late fees, pre-payment, and foreclosure charges.
These fees and charges add to the total cost of borrowing from the bank. Hence, you should consider them when choosing a bank offer.
The lower the fees and charges, the better. It keeps the total cost of borrowing in check, in turn enhancing the Loan affordability.
Summing It Up:
Applying for a Home Loan is a feasible way to finance your dream home purchase. You can choose to apply for it at any leading bank or financial institution.
If you are applying to different banks at the same time, make sure you compare their offers in order to get the best one.
Interest rate is one of the crucial pointers to consider as it impacts the total Loan amount and EMI.
Interest rate type, value, and clause are three aspects that you must consider with every single Loan offer.
