4 ‘need-to-know’ aspects about home loan interest rates.

Home loan interest rates are one of the most important factors of a housing finance loan. Going into the decision of a home without fully understanding every aspect of this cost could result in hassles later on. That’s why this article will discuss some of the important points about interest rates that should help you with a smooth and problem-free home loan experience.

1. There are types of interest rates suitable for different borrowers.

Once you’ve settled on a borrower after thoroughly comparing interest rates, you will be faced with a choice to choose among 2 or 3 different types of interest rates. Each of these rates is suitable for different borrower profile.

For example, fixed rates, as the name suggest, do not change over time. They remain constant despite changes in the base rate due to fluctuations in the market scenario or due to government policies. This makes them ideal for people who would like to plan their repayment.

The downside is that these rates are usually higher than floating rates; which change with respect to changes in the market scenario or due to government policies. However, these rates are lower than fixed and therefore are ideal for young entrepreneurs who have many working years ahead of them. So if there is any increase, their rising salary should be able to handle it.

Then there semi-fixed, this rate stays fixed for a short, predefined amount of time, say 2 or 3 years and then switches over to the variable rate. You should consult a financial expert to help you choose the right type of interest rate as per your financial capabilities & risk appetite.

2. Women lenders get lower home loan interest rates.

Yes, women borrowers get reduced rates. For example, if the base rate for a lender is 8.40, they might provide women borrower the same loan at 8.35 percent per annum. You can apply for the loan jointly with a female family member and avail this lowered interest rate.

3. Tax benefits. Home loan interest rates help you gain access to significant tax deductions under section 24 of the Indian Income Tax Act. In fact, you can use the annual interest amount paid to claim tax deductions up to Rs. 2, 00,000. This is an addition to the Rs. 1, 50,000 in tax deductions your principal repayment provides you under section 80C of the Indian Income Tax Act.

Further, these benefits are applicable to both applicants if you’ve availed a joint home loan. And if you’ve co-borrowed with a woman, you get lowered interest rates and double the tax benefits too!

4. You can avail lowered interest rates mid-way through your repayment.

If you wish to lower your interest rate during the repayment process, simply look for another lender that provides lower rates and transfer your outstanding balance to that bank or financial institute. This process is called home loan balance transfer or refinance and helps you get lowered rates, even mid-way through your repayment process.

For more details about these points or on home loan interest rates in general, you should speak to a financial expert or talk to one of the leading home loan providers; they should help put things in perspective and ensure you make the right borrowing decision.

Good luck and all the best.

Hi, I am Anurag Mishra working with Home Finance company as Home Loan adviser owing good knowledge of Home loan, Home Loans, Home Loan Balance Transfer, Mortgage Loan, Property Loan and Personal Loan so on.