How to Compare and Choose Home Loans in India
The stepping stone of availing a home loan is to start comparing home loans provided by different banks on the basis of interest rate. We do so as we think that interest rate is the only criteria to compare the home loan. However, we need to stop just for a while and think again! Blog: https://financebuddha.com/blog/how-to-compare-and-choose-home-loans-in-india
The stepping stone of availing a home loan is to start comparing home loans provided by different banks on the basis of interest rate. We do so as we think that interest rate is the only criteria to compare the home loan. However, we need to stop just for a while and think again!
Blog: https://financebuddha.com/blog/how-to-compare-and-choose-home-loans-in-india
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Fac<strong>to</strong>rs <strong>to</strong> Consider while Compar<strong>in</strong>g Different <strong>Home</strong> <strong>Loans</strong><br />
1. Interest Rate<br />
This is one of the most important fac<strong>to</strong>rs on basis of which home loan is<br />
compared. This is considered important as your EMI is <strong>to</strong>tally dependent on the<br />
<strong>in</strong>terest rate although there are some other fac<strong>to</strong>rs like the tenure period on<br />
which your EMI depends. <strong>How</strong>ever, let’s consider on <strong>in</strong>terest rate first.<br />
There are two k<strong>in</strong>ds of <strong>in</strong>terest rate<br />
1. Fixed <strong>in</strong>terest rate– When you go for a fixed <strong>in</strong>terest rate for your home<br />
loan the <strong>in</strong>terest on your loan will be fixed throughout the tenure. It means<br />
that your EMI amount will also rema<strong>in</strong> the same throughout the tenure.<br />
2. Float<strong>in</strong>g <strong>in</strong>terest rate– When you go for a float<strong>in</strong>g <strong>in</strong>terest rate for your<br />
home loan, the <strong>in</strong>terest rate on your loan can vary as per the market<br />
fluctuation <strong>and</strong> hence there may be a change of your payable EMIs or the<br />
tenure <strong>to</strong>o.<br />
Let’s underst<strong>and</strong> this with the help of an example-<br />
Yog<strong>in</strong> went on a home loan with a fixed <strong>in</strong>terest rate of 9% per annum, on the<br />
other h<strong>and</strong>, Rajan went on a home loan with float<strong>in</strong>g <strong>in</strong>terest rate which was<br />
<strong>in</strong>itially 8.50%. So, there will be no change <strong>in</strong> the Yog<strong>in</strong>’s <strong>in</strong>terest rate<br />
throughout the tenure <strong>and</strong> he will be pay<strong>in</strong>g the same amount as the EMI.<br />
Whereas there will be fluctuation <strong>in</strong> Rajan’s EMI as it will depend on the<br />
market fluctuations.<br />
2. Process<strong>in</strong>g Fees<br />
When you apply for a home loan you need <strong>to</strong> submit certa<strong>in</strong> documents. These<br />
documents needed <strong>to</strong> be verified <strong>and</strong> processed. Applicants are charged certa<strong>in</strong><br />
amount termed as ‘process<strong>in</strong>g fees’ regard<strong>in</strong>g these processes.<br />
These charges vary from bank <strong>to</strong> bank <strong>and</strong> may vary with<strong>in</strong> the same <strong>in</strong>stitution<br />
depend<strong>in</strong>g on the loan amount.Most of the banks charge this amount as a<br />
percentage of the loan amount or may be a fixed amount. It mostly depends on
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