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December 1, 2023

Do You Know These Interesting Facts About Housing Loan Interest Rate?

At a time where property prices are so expensive, applying for a home loan is one of the best ways to finance a house purchase. But before getting this loan, it is important to know the significance of a home loan’s interest rate. Many people have faced difficulties in repaying their home loans simply because of a lack of understanding of how interest rates work.

Here are 5 interesting facts on housing loan interest rates that you need to know about:

  • Two different types of interest rates

While applying for a home loan, there are 2 types of interest rates to choose from. One is a fixed housing loan interest rate and the other is a floating interest rate. With the first, the interest remains constant and is slightly higher than a floating interest rate. A floating interest rate could rise or fall in the future depending on market conditions.

  • Fixed interest rates have a reset clause

This is something that many borrowers are unaware of. Some lenders have a reset clause in the home loan policy, which states that the interest rate is subject to revision. Usually, the home loan interest rate is revised in case there is a sharp rise in the market interest rates. This clause could however vary from lender to lender. This is why it is important to read the fine print of the loan policy to be sure.

  • Women get lower interest rates

Lenders offer female borrowers lower interest rates on housing loans. The difference in the home loan rate could be as much as 0.05, which might not seem like much. However, since the loan is generally taken on a long-term basis, which can go up to a 20-year repayment tenure, there could be a significant difference in the cost of the loan.

  • Home loan interest rates are predicted to keep falling

The reason why there is so much talk about this being a good time to apply for home loan plans is because of their interest rates. Housing loan rates are currently at their lowest and might continue to fall. According to the Indian Express, a few reputed lenders have brought down home loan interest rates to the lowest in 15 years, and other lenders could follow suit.

  • Credit scores play a big role in the interest rate of a home loan

Lenders consider many factors while reviewing a loan application, one of which is the applicant’s credit score. A good credit record means that you clear all payments on time, which is a positive sign for any lender. This is why the lender is most likely to offer a low interest rate on the home loan if you have a good credit score.

Now that you have read about interest rates, always use a home loan EMI calculator to know about the loan EMIs. This will help in following a sound repayment plan and clear the loan with ease.

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