Are you ready to make one of the largest and most significant financial investments (a.k.a buying a house) of your life? Owning a home is the aim of almost every Indian, if not the aim of millions the world over. It is a valuable, and usually appreciating, asset. It is one asset that confers mental and emotional security in addition to financial stability as well. In order to fill that huge demand for buying a home, banks and other financial institutions have developed a variety of home loan options for you to choose from.
Importance of the interest rate
However, too many options can also lead to too much confusion! Whether you are starting to look at properties, or already identified a property, one of the most important factors when choosing a home loan is the interest rate. Even a 0.5% reduction in the rate can translate into big savings every month on your EMI for the entire tenure of your loan, stretching to 10-30 years. So while the loan amount or tenure is also important, you need to pay special attention to the different interest rate features of the housing loan options before you.
In order to land the best deal on a home loan, you need to make sure you have a healthy credit score. A credit score of 750 and above would ensure you get a loan offer at attractive terms and interest rate.
Things to do when comparing home loans
Once you ensure you have a good credit rating, you can use an online home loan comparison website in order to contrast and compare various loan offers. Don’t rely on only one site for comparison, shop around and compare rates, EMIs, fees, and other terms and conditions of repayment.
If you are an existing customer of a bank and have a good relationship with them, then approach them first. As an existing customer, you might be eligible for preferential rates as compared to rates offered to the general public. Make sure to check with your lender before approaching new lenders.
Read the fine print and ask for clarifications. A home loan is a big commitment and you need to be completely clear about what your financial outflow will be every month for the next 10-20 years. For instance, you would need to choose between a fixed rate or floating rate of interest loan. Ask your lender representative or even consult with a professional in case you have any doubt.
How do I calculate the interest I need to pay on various loan offers?
You can use CreditMantri’s online Home Loan EMI Calculator to find out how much interest amount you will pay towards your loan. The Calculator is fast, accurate, free, easy to use and can be used multiple times for various combinations of loan amount, interest rate, and tenure from each bank/NBFC.
Just enter the interest rate, the loan amount and the tenure, and the calculator will show you how much you need to pay as EMI. You cannot use the EMI calculator to calculate the interest rate – the interest rate is determined by the lender. You can use the Home Loan EMI Calculator to get an idea of exactly how much you will be paying as interest on each loan offer.
Deciding on a loan is a bit confusing?
Deciding on a home loan can be a pretty nerve-wracking experience if you are doing it on your own and for the first time. If you think you need help with securing the home loan best suited to your credit profile and financial needs, then CreditMantri can analyse your credit profile, guide you through the entire application process, and match you with the offers most suitable for you.