Many lenders, especially most public sector banks and some private sector banks and HFCs, have been offering home loan interest rates currently starting at as low as around 6.5%-7% p.a. While such low-interest rates make it a strong case for prospective home buyers to avail themselves a home loan and realize their dream of owning a home, especially for those who have the required minimum cibil score for home loan, the big-ticket size and long repayment tenures of home loans make it important to factor in other parameters before going ahead.
As a quick cibil check online before applying or even applying for a home loan can help you get credit ready, ensure to make it a practice to fetch your credit score every month.
Moreover, some banks and HFCs offer lower interest rates and better service terms for such high credit score applicants.
Also, make sure to accumulate adequate downpayment as per the property’s cost and LTV ratio offered by prospective lenders. Failure to accumulate the required downpayment can result in a home loan application getting rejected by lenders.
It’s also important for applicants to have an equal or more than minimum cibil score for home loan to check their EMI affordability before submitting a home loan application. As most home loan lenders tend to prefer lending to those with FOIR within the range of 50%-60% (including the new housing loan’s EMI), ensure to limit your FOIR within the 50%-60% range before going ahead with an application after completing the cibil check online.
Before going ahead and zeroing in on any lender, remember that apart from interest rates, the repayment tenure, LTV ratio, processing fee and even the loan amount offered by lenders can vary widely depending on their risk assessment of the home loan applicant.
Is it a good idea to go with the same lender with whom the developer has tie-up?
Homebuyers having a minimum cibil score for home loan can think of going ahead with the same lender with whom their developer has collaborated if the deal offers a lower interest rate than other prospective lenders, and other crucial home loan parameters such as the repayment tenure, LTV ratio, loan amount and processing fees make it a good deal overall.
But before arriving at any decision, make sure to have a look at the home loan offers and deals of other lenders being offered as per your financial requirements and loan eligibility criterion, besides not missing out on the crucial task of credit score check.
HFCs vs Banks
While choosing between banks and HFCs for availing of home loans, keep in mind that banks usually (but not always) offer lower interest rates primarily due to their cheaper source of funds, but they also tend to involve more stringent eligibility criteria when compared to HFCs.
However, market competition, especially to grab consumers having equal or more than the required minimum cibil score for home loan, often leads some of the well established HFCs to offer competitive interest rates on home loans, which currently beat the rates of many banks. Also, the presence of less stringent loan eligibility parameters of HFCs enables them to impart a greater degree of flexibility while evaluating loan applications.
Hence, before zeroing in on any lender, whether a bank or HFC, compare as many lenders as possible to strike the right deal, and ensure to go for a cibil check online before submitting an application.
Now that you have a very fair idea about HFCs and banks when it comes to home loans, it would thus be prudent to under the following aspects as well.
Concessions offered for home loans
-It’s mostly during financial year-end and the festive season when most lenders amongst banks and HFCs shift gears and lure prospective homebuyers with low and competitive HL interest rates, waiver in processing fees and further concessional rates for women applicants, especially those having the required minimum cibil score for home loan.
-Moreover, many lenders are also focusing and promoting existing home loan borrowers to opt for HLBT to take advantage of these low-interest rates. And opt for HLBT to shift to lower interest rates.
If someone has been waiting to buy a home, is now a good time to take HL and do so
-While the HL rates of many lenders had been witnessing a steep fall due to multiple repo rate cuts in the last few quarters, the onset of the festive season has become an added factor to the HL rates dropping to historic lows, with many lenders rolling out lucrative offers to generate an uptick in consumer demand in the housing industry.
-Moreover, the RBI’s recent move to rationalize the risk weights & link them to loan-to-value or LTV ratios for all new home loans sanctioned in India up to March 31, 2022, is expected to make home loans even more attractive for both borrowers and lenders and thereby benefit real estate sector as well.
-Home loan rates of a number of banks and HFCs have reached around the 6.5%-7% p.a mark.
-To get the best home loan deal according to their eligibility criterion like income, credit score, job profile etc., prospective home buyers should compare the home loans offered by as many lenders as possible for the best home loan offer after completing the cibil check online.
And if you are an existing home loan borrower, let’s simplify the ‘complex’ decision to prepay or keep money in FD
-It’s important to factor in the returns generated from existing investments while looking to prepay your loan. Although home loans probably have the lowest interest rates among all retail lending products, their rates are usually higher than returns of most fixed-income investments, like FDs of banks. Thus, a surplus parked in fixed income products like fixed deposits that are not earmarked for any financial goal can be used to prepay the loan.
-One should always desist from prepaying home loans from their emergency fund or investments earmarked for crucial financial goals, like a child’s higher education and marriage corpus or retirement corpus. Redeeming your existing investments meant for those goals may force you to avail costly loans later on to fulfil them.
