There
are a number of financial institutions and banks in India that provide varied
banking solutions, loans, investment options and many more services according
to an individual’s requirement. All banks are competitive in terms of offers,
discounts and the interest rates; hence, it becomes worrisome to select the
best amongst the hundreds of alternatives.
There
are more than a hundred banks in India which provide home loans to all classes
of people on the basis of affordability. The main and foremost feature to look
in the home loan is the “home loan interest rates” along with the repayment
methods. It should be competitive enough with no hidden charges, quick
processing time and the transparency throughout the procedure.
Understanding
the types of home loan interest rates helps to select the ideal one.
Ø Secured
Home loan: These are loans provided against some kind of security or guarantee,
such as a loan against property, any valuable asset, or jewellery or some legal
documents. If any default situation arises, then the pledged thing becomes the
lending institution’s property. In this case, the interest rates are
comparatively less.
Ø Unsecured
Home loan: Loans are issued without any security, but the interest rates are
higher as the loan is disbursed under the lender’s risk.
Ø Variable
Interest Rates: The interest rate may increase or decrease depending on the
market fluidity.
Ø Fixed
Interest Rate: Here, the rate of interest is fixed throughout the loan tenure.
Ø Split
Loan: Some lending institutions or banks also provide split loans in which half
of the loan amount is of variable type and the rest would be of fixed type.
Along
with home loan interest rates, there are a few other features to be looked into
while going for a home loan.
- The EMI concept - The Equated Monthly Installments (EMI) are calculated using the home loan EMI calculator, depending on the down payment amount, and the loan amount. The loan amount includes the principal rate and the rate of interest. The more the down payment, the lesser the EMI would be. Calculate and think about the size of EMI you can afford every month till the loan tenure.
- Loan Tenure - Loan tenure can be adjusted according to the affordability of the EMI. The increased loan tenure contains the increased rate of interest as well.
- The Processing and other hidden charges - There are banks, which believe in serving the people in any way, thus such banks waive off the process fee with an affordable interest rate. Compare the banks for the transparency in the procedure.
- Ensure the Eligibility criteria and the documentation process - Compare the eligibility criteria, some banks are not stern about the eligibility and also provide a relaxation in the age and income factors. Ensure the facts and ensure a hassle free documentation check process.
- Prepayment / Foreclosure options - The home loans can be closed anytime after six months of loan disbursal with a small percentage of foreclosure charges of the outstanding principal amount.
Thus,
narrow down your search after considering and understanding the features to
choose the best home loan, which can be applied either online or at the nearest
branches with the required documents. Then the essential verification are done
to disburse the home loan in 3-4 days.