Are you confused about the home loan interest rates? Check out this article to gain a holistic understanding of its types, factors influencing it and also few tips to get the best rate.

Interest rates are the highlights of the concept of loans. Besides loan tenure and loan amount, interest rates are the fundamental factors that can dramatically change your repayment loan amount. Hence, it is paramount to have a comprehensive understanding of this concept. 

There are various home loan rates; thus, choosing the most appropriate one, considering both its pros and cons, can be complicated. Hence, the most effective way to select is to possess a holistic knowledge of how the interest rates in a home loan function. 

In case you are planning to avail yourself of this financial aid, then make sure you are aware of the important aspects of home loan interest rate and how to get the most competitive rates. For the unversed, read this article to get comprehensive knowledge before choosing your home loan plan. Scroll down for more information. 

A housing loan interest rate is the additional amount you are giving to your lender along with the principal amount. For instance, if your loan amount is INR 100 and you are repaying at a 5% interest rate, then your repayment amount is INR 105. This extra five rupees is the interest rate amount. 

This rate is different for different banks and financial institutions and can fluctuate according to various external stimuli like governmental decisions, market fluctuations, etc. For instance, in the previous two years, the home loan interest rate in India had increased considerably. However, the study shows that in 2024, it is anticipated to drop by 0.5% to 1.25% due to various reasons. 

Let us take a glance at the competitive rates for the different home loan schemes. 

Three types of interest rates are applicable for home loans. The fixed, floating and hybrid rates. Each has its benefits and disadvantages. Hence, you must be very careful while selecting your rate type. Keep in mind your chosen option will be applicable for the entire loan tenure. Check out how they can influence your repayment amount. 

In this case, the interest rate decided at the beginning will continue throughout the loan tenure, i.e., external factors will not affect the interest rate. This, in some cases, means that if the general interest percentage reduces, you will not get the reduced rate. At the same time, if it increases, it will remain inapplicable to you. 

Here, the approach is just the opposite of the fixed variant. If you are opting for a floating rate, then your interest rate will be increasing and decreasing according to various factors like budget, market fluctuations, inflation, recession, etc. Hence, if you are hopeful of a decrease, then you must buckle yourself for an increase as well. This disparity will continue throughout the loan term. 

This is an amalgamation of the two types of interest rates mentioned above. The tenure begins with a fixed rate, and after a certain period, it changes to floating. It is a very tricky approach; if the shift of the rate types is not done within a favourable period, then the alteration might be inconvenient for you and vice versa. 

Several of us are unaware of the fact that it is indeed possible to achieve lower interest rates. However, you cannot obtain it the minute you plan for a home loan; rather, it is a slow and gradual process. Check out some of the effective tips to get the best home loan interest rates for your scheme. 

The most essential act that will prove your credibility to the lender is timely EMI payments of bills and other loans, if applicable. If you are irregular in completing your credit card or other bills, lenders increase the interest rate on the basis of uncertainties. Hence, pay your bills timely.

You may extend the tenure for years to reduce the EMI payment amount. However, keep in mind that the more loan terms you opt for, the higher the interest rate becomes applicable. Hence, make sure you are choosing the optimum tenure at your convenience. 

The lower the ratio percentage you can maintain, the lesser the home loan interest rate you can avail yourself of. It is best if you can keep it below 40%; anything above 50% can increase the rate. Additionally, it will ensure your loan approval is fast.

It is extremely crucial to maintain a good credit history. Most lenders determine the interest rate based on your credit score. A score of less than 700 will spike the rate percentage, while a score of higher than 800 will reduce it. 

Various factors determine and alter the home loan rates in India. Some of the common ones are as follows,

• Inflation

• Supply and demand of credit

• Governmental influence

• Market Fluctuations 

  
  How do you get the most competitive interest rates? The most foolproof method is comparing the various rates offered by banks and other registered platforms. However, avoid being swayed away by lesser interest rates. Rather, try opting for reputed banks like Karnataka Bank for a secure and enhanced experience.