All you need to know about housing loan interest rates

by Litty Jose Finance Analyst

Housing loan interest rates are perhaps the most important factor to take into consideration when you’re thinking of getting a home loan. Your housing loan interest rates decide the amount of EMI you pay throughout the tenure of your home loan. Housing loan interest rates can be a difficult thing to understand, and people often rely only of home loan EMI calculators to know how much they have to pay.

Housing loan interest rates aren’t that complicated though. They can be easily classified into two categories, fixed and floating interest.

1. Fixed Interest Rate: Fixed rate of interest on a loan would mean that the equated monthly installments or EMIs would remain constant over the tenure of the loan. Fixed interest rates are always set higher than floating interest rates, by 1 to 2.5% at the time of the sanction of the loan. This can be both and advantage and a disadvantage. Since these rates remain constant you don’t have to worry if there is a hike in the housing loan interest rates due to the passing of a bill or implementation of a new rule, but at the same time if the rates see a dip, there is no benefit to you.

2. Floating Interest Rate: In floating interest rates, the EMIs fluctuate as per the market dynamics as interest rate increases or decreases. Floating interest rates are usually lower than fixed interest rates although parameters like inflation and current account deficit are used in calculation of base rate by RBI, which can mean an uncertainty and different EMI for each repayment or installment for the loan. This can be difficult to keep track of as each installment may be different.

If you’re looking to apply for home loan online the PM Awas Yojana is something you should know about. This credit linked interest subsidy is designed so more and more people in India can afford to get home loans and buy houses of their own. The PM Awas Yojana is for people who fall in a specific income bracket. You can give your home loan application through this scheme if your income ranges from 2 to 18 lacs per annum.

The time is right for one to apply for home loan online, as the market is just right and you can find great housing loan interest rates that will suit your needs. There also a number of great projects underway that will give you great investment opportunities in the housing sector.