The factors that determine your home loan interest rates in India
The Indian property market is going through many changes; the cost of properties has increased way beyond the reach of the common man. Thus, the middle-class citizens of India are finding it difficult to purchase a property of their choice. Therefore, at such times, people often opt for loans through financial institutions or loan sharks. The interest rates charged by the financial institutions such as banks and NBFCs (non-banking financial companies) are way lower than the ones given out by traditional financiers and loan sharks. There is also a discount of 0.05% on interest rates provided on a home loan for women borrowers and co-applicants. However, we still look for ways to lower the interest rates further in order to enjoy the least amount of premium; but most of us are still unaware as to the factors that determine these interest rates. Therefore, we have compiled a list of few factors that determine the apnapaisa home loan interest rates in India, and they are here as follows:
- Margin amount: If you think that a housing loan finances you completely then you are wrong; because there is an amount of money that you need to shell out from your own pocket. This amount of money that you need to pay in order to purchase a property is known as a margin amount. This margin amount determines your housing loan interest rates in India.
- Repayment tenure: The repayment of a home loan is done in the flexible form of EMIs (equated monthly installments); this helps you to plan out all your present and future repayments in advance. These EMIs are calculated on the basis of the principal amount that you borrow; repayment tenure opted by you and the interest rates charged by the financial institutions. Thus, the repayment tenure that you choose has a major impact on your interest rates; if you opt for a lower tenure than you will have to shell out a lesser amount of money in the form of interest rates.
- Repo rate: The banks and NBFCs lend you monetary assistance when you face financial crises; however, at times even these financial institutions face such situation. At such times, they opt to borrow loans from the RBI (reserve banks of India). The RBI charges interest rates in exchange of the financial help provided to the banks- this rate of interest is termed as the repo rate and it plays a major factor in determining your home loan interest rates in India.
- Reverse repo rate: Just like the times when financial institutions face monetary problems, even the RBI might stumble across such issues. At such times, the RBI borrows loan from the financial institutions and the banks charge interest rates for the monetary assistance provided. The interest rates charged by the banks and NBFCs (non-banking financial companies) are termed at reverse repo rates.
Hope this article will help you understand the factors that determine your housing loan interest rates in India. Good luck and all the best!
