Things to know about the Interest Rates on House Loan

House loan interest rates are one of the most important aspects while opting for home loans.  It varies based on your principal loan amount, credit score, market scenarios and how good is your relationship with the lender. It is the crucial factor to decide the housing finance as well as the monthly installment of your home loan.

While quoting the house loan interest rates your income source, job stability, organization type, additional income source, credit score, age and number of dependents, property location and its value are taken into consideration.

Today, there are hundreds of players in the market and the competition is really getting intense in the mortgage markets. Therefore, banks and finance companies are catering loan with customized solutions and at lower interest rate deals. They come up with various attractive schemes to lure potential borrowers or retain the existing customers. One can compare the deals online, in terms of interest rates, processing fee, flexible repayment, tenure, etc. and then decide upon the bank or housing finance they would like to take the loan from.

Few things to know about the interest rates that might be useful to our housing loan process:

Compare

Comparing the products will help you go for better house loan interest rate deals. With good income source and credit score and at a younger age you're in a commendable position to negotiate with the lenders for interest rate deals. Even 0.5-1% reduction can help you save lakhs in the long run.

Types of Interest rates

Home loans interest rates are of three types fixed rates, floating rates, and partial fixed-floating interest rates. Fixed rates will help you get uniform monthly installment through the loan tenure, floating rates depend on market volatility and government policies. So, they are bound to give variable monthly installment. Under partial fixed-floating interest rates, the rate will remain constant for a couple of years to protect you from the tides of the market and thereafter the rate gets floating and changes to variable interest rates.

Better rates for Women

Most lenders provide often empower women with slightly low-interest rates. They know women are more responsible borrowers and therefore offer a concession of around 0.05% on the loan amount. This slight reduction can also help in substantial savings over the span of 25-30 years. If there is a women joint application (spouse) you can vouch for better house loaninterest rates deals and higher loan limit as well.

Tax Benefits

Under section 24 of the Income Tax Act, 1961 the interest on housing loan you pay in a given year can help you avail tax benefits for up to Rs 2, 00, 000 per year. If you apply jointly, both you and your co-applicant can avail the benefit. Thus, it’s like in a way doubling the saving from the interest paid.

Balance Transfer 

Just in case you feel that your existing loan provider is way too costly and not giving you any concession on the interest rates, you can transfer your loan to another lender through home loan refinance.  You can have a word with the new lender, do the necessary paperwork and you will enjoy ample amount of savings on your housing loan.