While home loans are easily available, it is essential to avail of the one with the lowest interest rate, thereby saving money. Important criteria such as loan percentage, lowest fixed and floating interest rates, availability of prepayment option, special concession for women and senior citizen etc, will help people to choose the home loan best suited for them.
Taking a home loan in present day has become very simple due to more banks and private lenders offering flexible interest rates and various budget options. In this wide market, it is important for one to do their research and choose the one which allows them to save the most money. Every year, banks launch new home loan schemes and introduce loan options which suit the economic trend of the country. Public sector banks will not raise the home loan interest rate as they are pressurized by the finance ministry to protect the home loan borrowers.
Four ways in which you can identify a good home loan scheme are:
- Check the percentage of loan offered:
One can decide which is the best home loan based on the percentage of the home loan offered. If one bank is offering 80% of the amount required to buy the house and another is offering 85%, it makes sense to choose the latter. This is helpful only if you are unable to afford large sums for down payment but subsequently, your EMI will increase in the percentage amount offered.
- Analyze the interest rates and prepayment charges:
The smartest way to save on home loans is to choose one based on the rate of interest and free processing offered. Checking for the EMI, prepayment charges and processing fee and looking at comparative rates are good ways to sift through to the best home loan offers. According to the RBI, banks are not allowed to collect a prepayment charge from home loan borrowers for floating interest rates. It is also easy to change the loan from one bank to another along with the transfer of balance.
- Consider loan process and time involved:
The process of applying for a loan is a lengthy procedure and requires the submission of many property and income related documents. The time taken for the application to be considered and the loan to be disbursed differs from bank to bank, but this time should also be taken into account when considering a loan. Apply to a bank which has a simple process and saves time with better schemes. While there are agents who can guide you through this process, it is not possible to gauge their credibility. Researching can help you find the best home loan schemes which take the least amount of time. Applying for a loan online would also reduce the amount of time it takes for the loan to be approved.
- Special concession schemes:
Some banks would offer special concessions to senior citizens and women which would save them a considerable amount on the interest rate. LIC housing finance offers a 10% special interest rate for female borrowers in comparison to the normal 12.25% offered for others. People could also look into different kinds of loans such as hybrid loans, joint loans, etc.
Choosing the best home loans scheme would mean that you would save money in the long run. When the plan is suitable to your financial conditions, it also reduces the stress induced by taking a home loan.