Home loan rates have never looked this attractive in India. Thanks to new rates being linked to repo-rate- which is at an all-time low of 4 percent- coupled with the low demand, banks have cut rates to below 7 percent for the first time in several years.
If you were to take a home loan today, could you get it for as cheap at 6.7 percent from Union Bank of India, which is the lowest offering for the category of women borrowers, who are salaried and have a decent CIBIL score.
Bank of India’s home loans start from 6.85 percent, SBI, HDFC Limited, Axis Bank, ICICI Bank, and Kotak Mahindra Bank are all offering home loans starting 6.90 percent, and so on.
Apart from lowering interest rates, banks are also doling out festive season offers on these loans to lure customers. SBI, for instance, has waived off all processing fees for loans applied through its YONO app. It is also offering an Interest rate concession of up to 10 bps based on credit score and 5 bps if applied through the YONO app.
HDFC is offering discounted home loan rates starting at 6.90 percent under its ‘Monsoon Bonanza’ scheme, a special offer of home loan up to 90 percent of the property value, lower processing fee and no pre-payment charges on foreclosure of home loans. ICICI Bank is offering home loans with processing fees starting Rs 3,000 plus GST, and a top-up of 100 percent of the original loan amount. Bank of Baroda has also waived off the processing fee on home loans.
While these offers are tempting, here are a few things you should keep in mind if you’re considering taking a home loan.
(1) Compare interest rates to find the cheapest option: Check rates, terms, types of loan schemes available
(2) Go through the fine print to see terms and conditions attached with the loan to avoid any unwarranted surprises in future
(3) From documentation charges, processing fees, late payment fee, prepayment fee, legal charges, etc- make yourself aware of all such costs before you finalize on a home loan scheme
(4) Speak to your CA to find out what tax benefits you can avail on your home loans.
Here are the factors that will influence what rates banks finally offer you.
(1) The first is your credit score. Banks always check your credit score when you apply for loans. If you’ve had a good credit history with no defaults, you’re more likely to get a better/lower rate from the bank versus another person with a bad track record of repayment.
(2) A stable, high income is rewarded with lower interest rates as the bank perceives a lower risk of default for this category of borrowers.
(3) Employment Type matters too: Salaried applicants are likely to get a slightly lower rate compared to the self-employed.
(4) Interest rates do depend on the size of the loan you take.
(5) The more money you pay upfront as a down payment, the lower your EMI will be.
(6) You can opt for a “Fixed” or “Floating” rate. Floating rates tend to be lower than fixed rates on average.