Major Factors You Should know that affects your Home Loan Interest Rates

It is the dream of so many people to either or building a home of their choice. In the event of funds shortage, the facility of home loans has emerged as a viable solution. 

As per your eligibility and other factors, you can avail of a significant amount. But since it comes with a longer tenor, the home loan interest rate charges are on the higher side. 

On that note, it would be good to look at a few factors affecting home loan interest rates. 

1. Your CIBIL score 

Your CIBIL score affects your payable home loan interest rates. It is the mirror of your creditworthiness and hamper’s the faith of your lender in loan repayments. If your credit score is lower, you may not get the loan approval. Even if you do, you may have to pay higher housing loan interest rates. If your CIBIL score is higher, you can get approval at a lower housing loan interest rate. You should work towards maintaining a credit score of 750 or more. 

2. Your home loan value 

The higher is your home loan price, the more you will have to pay as home loan interest rates charges. Hence, if you don’t need a large property, you can opt for smart home and pay lower interest charges. 

3. Your loan tenor 

While it’s good to pay a smaller EMI per month over a longer home loan tenor, it also means repaying higher interest charges. Therefore, you should try to opt for a shorter tenor and save on home loan interest charges. Yes, your home loan EMI may increase over a smaller tenor, but there will be considerable interest savings. 

Since you have an idea about factors affecting your home loan interest rates, you can implement the same and save more on repayments.  

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Avail Home Loan Subsidy Under PMAY Yojana 2021

 If you are building or buying your first-ever pucca home in India and want to do that using a housing loan, you can save on interest charges. It is because you can avail of a home loan subsidy of up to Rs.2.67 lakh on home loans. 

It will be as per your income categories of Economically Weaker Section (EWS), Lower Income Group (LIG), and Middle Income Groups 1 and 2. The facility is available under the Pradhan Mantri Awas Yojana (PMAY) of the Central Government of India. 

Let’s know how much subsidy can you enjoy when you apply for a home loan under PMAY’s credit linked subsidy scheme (CLSS)!

The breakup of subsidy on home loan under PMAY

1. EWS 

Applicants belonging to the EWS category should earn a maximum yearly income of up to Rs.3 lakh with a maximum home loan of up to Rs.6 lakh. With a loan tenor of up to 20 years, the carpet area of the home should be 30 sq mt. They can get a 6.5% subsidy on interest per year, amounting to a maximum of Rs.2.67 lakh. 

2. LIG 

For LIG housing loan applicants, their income should be between Rs.3 lakh and Rs.6 lakh. The max carpet area should be 60 sq mt and a home loan of up to Rs.6 lakh. The loan duration is a maximum of 20 years, with subsidy on interest being 6.5% per year to the tune of up to Rs.2.67 lakh. 

3. MIG 1 

MIG 1 applicants are those who earn an annual income between Rs.6-12 lakh. They are allowed a carpet area of 90 sq mt and a maximum home loan of up to Rs.9 lakh. The loan tenor is for 20 years, with interest subsidy being 4%, amounting up to Rs.2.35 lakh. 

4. MIG 2

For MIG 2 candidates, the yearly income should be between Rs.12-18 lakh, with the max carpet area being 110 sq mt. The maximum housing loan is up to Rs.12 lakh with a tenor of 20 years. They can enjoy a subsidy of up to 3% to the tune of up to Rs.2.3 lakh. 

You can check out your PMAY eligibility and start making the most of PMAY benefits. This way, you can pocket subsidy on home loan interest charges.  

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Home Loan Digital Sanction Letter within a few minutes with Bajaj Housing Finance Limited

Were you looking to apply for a home loan to buy your dream home? If yes, you may like to settle for a bank like many more. 

But applying for a home loan with a conventional letter may take more time for approval and more. 

But if you opt for the Bajaj Housing Finance Digital Sanction Letter within a few minutes with Bajaj Housing Finance Limited, you may get the digital sanction letter instantly. Want to know more? Read on!

What is a home loan digital sanction letter instantly?

The Bajaj Housing Finance Limited is a subsidiary of Bajaj Finance Limited, a known non-banking finance company (NBFC) in India. 

The leading housing finance company has recently announced a revision in home loan approval time. 

Anyone fulfilling the home loan eligibility criteria can get a digital sanction for an e-home loan within a few minutes. 

The biggest benefit of applying for a Bajaj Housing Finance home loan will be expediting the process of availing finance for a property. 

In turn, eligible borrowers will be able to save on time and efforts and complete the housing loan process over a smaller duration.  

With instant approval available, it can help borrowers streamline the entire home buying procedure. Once you have received the digital sanction letter for the Bajaj Housing Finance home loan, it stands valid for 6 months.

If you wish to make the most of the Bajaj Housing Finance home loan sanction letter, you can first meet the lender’s eligibility. To do that, you can land on the Bajaj Housing Finance Limited website and access the home loan calculator. 

If your CIBIL score is higher, you have been consistently employed or have a business vintage of at least 5 years; you can avail of lowest home loan interest rates. It can assist you to save huge on repayments.  

Also Read: 5 Important Factors You Need to Know About Home Loan Incentives

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Home Loan Digital Sanction Letter within a few minutes with Bajaj Housing Finance Limited

 Were you looking to apply for a home loan to buy your dream home? If yes, you may like to settle for a bank like many more. 

But applying for a home loan with a conventional letter may take more time for approval and more. 

But if you opt for the Bajaj Housing Finance home loan, you may get the digital sanction letter instantly. Want to know more? Read on!

What is a home loan digital sanction letter instantly?

The Bajaj Housing Finance Limited is a subsidiary of Bajaj Finance Limited, a known non-banking finance company (NBFC) in India. 

The leading housing finance company has recently announced a revision in home loan approval time. 

Anyone fulfilling the home loan eligibility criteria can get a digital sanction for an e-home loan within a few minutes. 

The biggest benefit of applying for a Bajaj Housing Finance home loan will be expediting the process of availing finance for a property. 

In turn, eligible borrowers will be able to save on time and efforts and complete the housing loan process over a smaller duration.  

With instant approval available, it can help borrowers streamline the entire home buying procedure. Once you have received the digital sanction letter for the Bajaj Housing Finance home loan, it stands valid for 6 months.

If you wish to make the most of the Bajaj Housing Finance home loan sanction letter, you can first meet the lender’s eligibility. To do that, you can land on the Bajaj Housing Finance Limited website and access the home loan calculator. 

If your CIBIL score is higher, you have been consistently employed or have a business vintage of at least 5 years; you can avail of lowest home loan interest rates. It can assist you to save huge on repayments. 

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Best Time to Refinance Your Home Loan: A Complete Guide

Home loans come with remarkably long repayment tenors, ranging from 15-20 years. Such an extended period can entail several changes in one’s financial position and make it increasingly difficult for borrowers to chalk out an effective loan management plan.

Consequently, repayment difficulties, plus reductions in home loan rates as seen now, prompt many borrowers to seek refinancing. However, individuals need to time their home loan transfer depending on the following factors to ensure optimum savings.

• Changes in financial position: Unprecedented circumstances leading to an increase or decrease in income is very common. Borrowers can choose balance transfer if their current lender is unwilling to adjust the home loan EMI terms to facilitate ease of repayment. 

• Lower interest rates: One of the most prominent reasons for individuals to choose housing loan refinancing is a decrease in interest rates. Several financial institutions refuse to lower the floating interest rates of existing loans upon a repo rate cut. In such cases, borrowers can switch to a lender offering lower rates. A loan transfer can also be helpful if you are willing to switch from high fixed rates to lower floating rates.

• High outstanding and tenor: Interest component of home loan EMI decreases over time, with each EMI payment. Thus, seeking home loan transfer is a wise option only during the early years, preferably the first quarter of your tenor, since it ensures maximum interest savings.

Note that irregular EMI payment history with your current lender can lead to poor home loan eligibility and might deter a refinancer from approving your application. 

Also, make sure the total cost of refinancing, including processing fees, transfer charges, valuation fee, etc., does not exceed your anticipated interest savings. Stay updated with the latest regimes for home loan tax benefits to enhance the interest savings availed through a balance transfer.

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Top Benefits and Uses of Home Loan EMI Calculator

 Securing a lump-sum credit to purchase your dream house might sound appealing. However, it might not be a convenient choice if not planned efficiently. These large sums are accompanied by substantial interest components and can result in hefty repayments. Defaulting on an instalment due to financial constraints in the course of a loan can negatively impact a borrower’s credit score. Using an EMI calculator before applying can help individuals plan their repayments more effectively.

Following are some significant ways in which an EMI calculator can benefit potential borrowers.

1. Accuracy and speed: EMI calculation involves a complicated procedure, and manual computation can result in discrepancies. Using a home loan EMI calculator provides accurate results within just a few seconds.

2. Effective financial management: An EMI calculator displays the total payable amount, EMI and the interest component separately. Individuals can adjust their inputs until these results match their home loan eligibility and affordability. Picking a suitable tenor and loan amount can aid in smooth repayment.

3. Comparison: Since interest rates vary across lending institutions, using an EMI calculator can help users compare monthly repayments under different lenders easily.

4. Free and easy: Home loan calculators are available on almost all financial institutions’ websites, free of cost. They are also easy to use. Individuals only need to enter 3 inputs to get the results.

Potential borrowers can enter the following details to view their payment breakup.

• Required principal amount

• Interest rate

• Preferred tenor

Note that a longer tenor might result in smaller home loan EMI payments but will lead to increased interest cost in the long run. Conversely, if you can compromise your luxuries for higher EMIs, choose a shorter tenor and save remarkably on interest payments.

Also, be aware of home loan tax benefits under the tax regime you have opted for, new or old.

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Amazing Tips to Reduce Your EMIs on High paying Home Loan

Are you paying a higher home loan EMIs affecting your outlays? 

A home loan is a long-term obligation that helps a considerable amount to buy or build a new home. 

But if you are managing higher housing loan EMI, you don’t have to worry. It is because it is possible to reduce home loan EMI by following a few tips. 

Read on this quick post!

1. Go for a higher down payment 

When you apply for home loans, you will not get the entire value of your new home as the loan amount. The maximum you can get is 75-80%. The rest has to be arranged on your own and known as the down payment amount. Hence, if you put down more than the regular amount, you will need to borrow less. A lower borrowing amount means you can reduce home loan EMIs considerably. 

2. Make regular part prepayments 

If you already have an active home loan account, you can still reduce home loan EMI. It is by making time-to-time part prepayments. You should do that during your initial loan tenor so that you can pay off a large interest amount. Before doing that, you should check if your lender charges any amount for making part prepayments. 

3. Opt for a home loan balance transfer

If you see a really good offer from a lender providing you with a lower rate of interest, you should switch your loan account to it. This facility is known as the home loan balance transfer. This way, you can bring down your EMI amount and also save on interest charges. 

Other than these tips, you can also go for Pradhan Mantri Awas Yojana (PMAY) if you are buying or building your first-ever pucca home. 

It can help you pay reduced EMIs because you can get an interest subsidy on home loans up to Rs.2.67 lakh as per your eligibility.

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Follow These Easy Steps to Reduce Your Home Loan EMI in 2021

The process to compare different lenders and opting for the lowest interest rates is inevitably the modus operandi of most borrowers while availing a home loan. In order to help prospective borrowers out, most financial institutions offer a home loan EMI calculator where one can check the EMI payable beforehand and check if the same matches his/her repayment capacity. 

In case you think that the Equated Monthly Instalments will put severe stress on your budget, consider following the below-mentioned options to reduce your EMI. 

• Negotiate home loan interest rates: Since this factor directly impacts your loan EMI, it is important to negotiate and choose the right interest rate to facilitate easy repayment. In this case, borrowers availing the loan on floating interest rates automatically benefit from the reduction in market rates. 

• Opt for a longer loan tenor: Even though opting for a lengthy tenor increases your total interest outgo, it also reduces the home loan EMI. It is wise to make use of the online home loan EMI calculator to find a suitable loan tenor that makes your repayment process convenient. 

• Pay more as a down payment: Consider making a hefty down payment as it can reduce the amount availed as loan, and consequently the EMI as well. Also, paying a higher amount as a down payment not only reduces your EMI but also ensures fast approval.

• Choose home loan balance transfer: In the case of existing borrowers, a home loan balance transfer is a great way to reduce your monthly financial burden. Find out which lending institution is offering the lowest interest rate at that moment and transfer your loan. 

Both the rate of interest and loan tenor play significant roles in home loan EMI reduction; therefore, it is wise to pay attention to the factors associated with them. Consider comparing different deals offered by financial institutions and use the home loan EMI calculator to plan your repayment at the very onset.

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Points to be Noted Before Applying for a Home Loan

Owning a residence is a significant financial decision for any borrower. However, purchasing a home requires substantial credit, which a housing loan can cover conveniently.

In this regard, first-time buyers need to make an informed decision evaluating the interest rate and repayment capability. Apart from these factors, individuals need to check a few things before making the home loan application.

Few pointers to keep in mind before initiating a home loan application

1. Credit score plays a crucial role

Whether you are a first-time housing loan applicant or a borrower with credit-availing history, lenders check credit score for evaluation. This score ascertains an individual's repayment capability and consistency of paying the outstanding dues. Typically applicants with a 750+ CIBIL score have a higher chance of home loan approval and enjoying reduced home loan interest rate.

2. Evaluate the EMI obligation

Applying for a home loan also obligates borrowers to monthly instalment outgo. One would need to assess whether he/she can bear the resultant EMIs. Individuals can use a home loan EMI calculator in this regard for a precise result.

3. Tenor

Additionally, applicants should also check the home loan tenor. This would help them in calculating their repayment structure. Going for a short tenor reduces the interest burden and outstanding balance. However, it increases the EMI burden. Applicants must also check the part-prepayment policy and foreclosure charges of the selected lender.

4. Assessing the documentation

Before making a home loan application, individuals must check the document requirement mentioned by lenders. Keeping these papers handy streamlines the application process and makes it hassle-free.

Some of the required documents are –

• KYC documents- This includes passport, PAN card, Aadhaar card, driving license, etc.

• Income proof- It includes salary slip or Form 16 for salaried applicants and profit & loss statement and TR papers for self-employed.

• Business vintage of not less than five years.

• Bank statements for the previous six months.

Apart from the mentioned documents, different lenders may have additional requirements like passport-sized photographs, property papers, etc. Hence, before making a home loan application, potential borrowers must evaluate the mentioned factors for swift processing.

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Important Things to Consider Before Switching for Home Loan

Borrowers often look for different measures that can help them reduce their interest rates and make home loan repayment easier. A home loan balance transfer comes as a great aid for individuals who are unable to bear excessive monthly interest charges and hefty EMIs. This process entails transferring your existing home loan account from one financial institution to another to enjoy lower interest rates and better service terms. 

However, before getting into that process, apart from using a home loan balance transfer calculator to compute liabilities, borrowers should take certain things into consideration. For instance -

• Charges associated while making the transfer

Since your primary goal is to alleviate your financial burden, you need to make sure that your current lender is not going to impose additional charges when you are making the switch. While the existing financial institutions can impose fines and additional charges, the new ones can ask you to pay for processing fees, administration, and other costs. Therefore, before getting into that process, it is wise to determine the overall cost you’ll need to bear using a home loan balance transfer calculator.

• Check your credit score

While availing a new housing loan, a decent credit score helps you enjoy faster approval and moderate interest rates. Having a high credit score comes with multiple benefits, even in the case of a home loan balance transfer. Lenders will be checking how you have handled the previous loans, if you have a history of defaults, etc., before approving the process. 

• Check if the new lender is offering top up loan facility 

While making the switch, borrowers should also check whether the new lender is offering a top up loan facility. A top up loan entails an amount that is available over and above the existing loan principal. Even the tenor against this top up can be similar to your existing one, making it easier to handle the repayment. 

In order to utilise the home loan refinance benefits, it is advisable to check the market rates and gather ample information about the new lender beforehand.

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