Home loan interest rates in India
The interest rate on your home loan’s principal amount is the primary factor that dictates its affordability. When you repay your home loan, typically, each EMI will consist payment towards the principal and interest. So, getting a loan sanction with competitive home loan interest rates will allow you to keep your home loan cost-effective.
Types of home loan interest rates
Home loan interest rates are of two types: fixed and floating. In case of the former, the interest rate is constant throughout the tenor.
In case of a floating interest rate loan, the interest you pay is likely to fluctuate throughout the tenor. This depends on a number of variables.
Factors affecting interest rates
In addition to your credit score and other personal eligibility parameters, here are factors that affect your home loan’s interest.
- Repo rate: The repo rate is the rate at which the RBI lends money to banks and financial institutions. Therefore, if the repo rate is high, then a lender is likely to have high home loan interest rates too.
- Cash reserve ratio: Financial institutions have to deposit a certain amount of funds with the RBI. This stipulated amount is known as the cash reserve ratio. If the CRR rises, lenders have limited reserves to offer as loans. This results in an increase in home loan interest rates.
- Demand for funds: If the demand for home loans is high, banks will have lesser funds available to lend. As a result, they will levy a higher interest rate on home loans.
Now that you know what affects a home loan’s interest rate, pick one that has nominal interest, such as the Bajaj Finserv Home Loan. Additionally, enjoy beneficial features such as a flexi home loan facility and handy top-up loan.