Key Points To Remember About Home Loan Interest Rates

Posted by arjun on June 24th, 2019

Finally decided to take a home loan? We applaud your decision - it will help you realize your dreams with ease and ensure you are soon the proud owner of your own home. However, there are many aspects of housing loans that need careful consideration. Of them, there is no debate that interest rates are one of the most important aspects. Keeping this in mind, the following article will go over some important points you need to remember about the price tag of a home loan, i.e. the interest rate.

1. There are types.

There are different types of home loan interest rates and borrowers can choose between them based on their needs. You could opt for fixed, floating & semi-fixed rates. Fixed are usually on the higher side and remain constant through the repayment tenure. So even if the rates in the market increase, the lender will have to provide you the same rate. Floating rates are generally lower and can drop further or shoot up, depending on the market sentiments. Lastly, semi-fixed interest rates change from fixed to floating in a couple of years, giving you the best of both worlds.

2. Home loan interest rates can be reduced.

There are a couple of hacks you can use to reduce the rate applicable on your home loan. First off, you could co-borrow with a female family member such as your mother, sister, wife or daughter. This will bring you an automatic reduction of 0.05% on your rate. You could also provide higher down payments as interest rates are generally lower for smaller loan amounts. You can also reduce rates after borrowing your home loan; all you have to do is find a lender offering lower rates and transfer the outstanding loan amount to that lender.

3. Paying interest helps you save money.

An important point to take into consideration when it comes to home loan interest rate is the fact that they help you save on annual tax payable. This is because, as per section 24 of the Indian Income Tax Act of 1961, the interest amount you pay in a year can be utilized to claim an equal amount of deduction on your taxable income up to a limit of Rs. 2 lakhs. This helps you save a great deal and is in addition to the tax deductions provided to you by repaying the principal amount.

4. You could be eligible for a subsidy.

Yes, the PMAY CLSS (Pradhan Mantri Away Yojana Credit Linked Subsidy Scheme) offers savings of up to Rs. 2.63 lakh through subsidies on the Apnaloan home loan interest rate. You can avail of this benefit if your annual household income is below Rs. 12 lakh.

5. Today’s rates are possibly the lowest ever.

Another point to remember is that the home loan interest rates applicable today the best in the history of home loans. Further, recent cuts in the RBI’s base rate mean that rates could fall even further in the near future. So if you’ve been toying with the idea of a home loan, it makes sense to materialize your ideas as there’s probably never been a better time to take a home loan.

Hope this has been helpful. Good luck and all the best, congratulations in advance on your new home.