A home loan is a secured loan that an individual achieves by buying an asset while pledging it as collateral. They provide high-value funding at a budget-friendly housing loan interest rate over a long time. Home loans offer plenteous advance money to help a borrower achieve his/her personal or financial goal.
Everything about current housing loan interest rates
There are several tips that a borrower should follow in order to reduce home loan interest rates. They are:
Choose a shorter tenor
When a borrower goes for a longer tenor, he/she gives more interest. Hence, it is recommended for them to use the housing loan EMI calculator to select the home loan tenor that suits them best.
Avoid missing any prepayment
The interest rate on a home loan comprises the interest charged on borrowed money and the principal. Making part-prepayment will lessen not only the principal amount of the loan but also its tenor. Hence, with the reduction of loan tenor, the interest rate will also get dropped.
Avail a housing loan balance transfer
Similar to other EMIs, a home loan EMI comprises the principal amount and the interest rate. As the loan reaches maturity, the principal gradually gets paid, decreasing the outstanding loan.
Review EMI pay-outs every year
Borrowers need to verify the EMI payments made throughout the entire year. Moreover, during their salary hike, they can escalate their EMI amount. Although it may sound hectic, increasing EMI amounts will reduce the housing loan interest rate alongside its tenor.
Current home loan interest rates 2022
- Interest type – Floating
- For salaried individuals – 7.95% to 15.00%
- For self-employed individuals – 8.35 to 15.00%
What is the housing loan interest rate?
The portion of money a lender charges to the borrower on the principal amount while using it. The interest rate charged by financial institutions or NBFCs, figures out the cost of a home loan to be taken by the borrower.
While paying a home loan amount via EMI (equated monthly instalment), an additional interest rate is charged. This shows the sum a mortgagor has to pay to his/her lender against their loan each month. However, the interest rates are connected to the repo rate, so it changes from one lender to another.
For instance, many financial institutions provide pre-approved offers through which the lending process enhances. They provide these offers on various financial products like home loans, loans against property etc. Applicants can check their pre-approved offers by entering details like their names and contact numbers.
Types of interest on home loans
Two types of housing loan interest rates are available. An individual decides how to choose between floating and fixed interest rates.
Fixed interest rate
A fixed interest rate remains constant throughout an entire loan tenor. Remember that when a person desires to take a home loan for a smaller tenor, then choosing a fixed interest rate will be ideal. But financial institutions will disallow it if he/she asks for a longer tenor home loan. However, institutions will enable a borrower to shift into a floating interest rate system after they implement a particular duration in the loan tenor.
Floating interest rate
Unlike a fixed interest rate, a floating interest rate varies according to the recent market housing loan rates. To foresee the interest rate in the home loan process can be problematic. Hence the best solution for it is to visit the lender’s website. The floating interest rate also relies on several factors like RBIs financial policy and loaning rate reviews, response to reviews by financial institutions etc.
Benefits of home loan balance transfer
There are several benefits to a home loan balance transfer. They are:
- High top-up loan
- Low rates of interest
- No additional charges
- Insurance facility
- Online account access
While opting for a home loan, a borrower must follow every necessary term and guideline. The best thing he/she can do is select the exact financial institution that offers the guide to getting better home loan interest rates.