A few factors that determine your housing loan interest rates.
The Indian property market has developed greatly in recent years. Thus, the costs of residential properties and lands have increased tremendously. Hence, there are a lot of people who are unable to buy a property of their choice. However, now there are a lot of banks and NBFCs (non-banking financial companies) which provide financial assistance in the form of home loans. Thus, people can make use of these loans to buy a residential property, renovate their existing one or use it for a home extension. The biggest advantage of making use of these loans is that the housing loan interest rates charged by banks and NBFCs (non-banking financial companies) are lower than those charged by traditional financiers.
The financial institutions also offer special discounts for women borrower- to empower them to purchase their own property. The new-age financiers offer principal amount and charge interest rates on the basis of your loan tenure and the borrowed amount. The repayment of the loan amount is done in the flexible form of EMIs (equated monthly installments); thus, you can plan out future repayments in advance and make sure that you never default on any repayment. There are also tools such as EMI calculator made available for you to calculate your housing loan interest rates. An EMI calculator is available on online websites and is absolutely free of cost. This calculator will help you to calculate your installments by the changing principal amount, interest rates and tenure; thus, allowing you to choose the loan with the lowest interest rates. However, there are other factors which determine your interest rates.
A few of those factors are here as follows:
The loan tenure: You loan tenure plays a significant factor which determines your housing loan interest rates. If you opt for a loan with a longer tenure; it may help you reduce the EMIs (equated monthly installments that you pay). But at the same time, this will affect your home loan interest rates negatively. Thus, shorter the repayment tenure, lower are the interest rates charged by the financial institutions. However, make sure that you will be able to repay those higher installments.
Repo rate: Banks and NBFCs (non-banking financial companies) provide financial assistance to us when we face a cash shortage. But there may be times when even our very own financial institutions themselves might face such a monetary crisis. In such times, the financial institutions borrow money from RBI (reserve bank of India). Even RBI charges a certain rate of interest on the money lent to these financial institutions. Thus, the changes in the repo rates affect your housing loan interest rates drastically.
Reverse repo rate: At times, even the RBI (reserve bank of India) might face a cash shortage. In those times, they borrow money from the banks and NBFCs (non-banking financial companies). The rate of interest charged by financial institutions on the amount of money lent to the RBI is known as reverse repo rate. The changes in the reverse repo rate have a great effect on the home loan interest rates.