Blog #Home Loan Interest Rates

Home loans being a long term debt provides loan takers with an option on the type of interest rate that can be charged on the value of the loan. 

The two types of Home Loan Interest Rate are -

• Fixed Interest Rate : 
  A fixed interest rate remains unchanged over the loan term, resulting in a consistent home loan EMI. When the present home loan rate of interest is shallow and an upward trajectory is expected in the future, it is best to apply for a home loan at a fixed rate of interest. However, with the recent trend of lower mortgage rates, banks offer consumers the option of switching to variable/floating home loan interest rates after a certain amount of time has passed.
  
  
• Floating Interest Rate : 
  A floating interest rate, also known as a free rate of interest, is based on actual market lending rates, which fluctuate over the term of the loan. The EMIs on a home loan may rise or fall in response to interest rate changes. With the recent pattern of lower mortgage loan rates, potential home loan applicants will benefit from applying for home loans with a floating rate of interest.

All banks and NBFCs offer home loan deals which might seem more impressive than the last one. It is essential to understand some details about the method of calculation of home loan rate of interest.

• Flat Rate Method : 
  In this method, interest is measured on the principal sum lent by the lender at the outset. This means that even after ten years of debt forgiveness, interest will be calculated on the same principal balance, causing you to pay more interest. This way of calculating interest is often used in microfinance.
  
  
• Reducing Balance Method : 
  When you pay an EMI, you pay a portion of the total as principal and the remainder as interest on your loan. Over time, the remaining principal balance is reduced. Lenders measure interest based on the lowered unpaid balance. You incur less interest in this form when the principal outstanding falls as you pay the loan EMI.

The procedure for reducing the balance can be yearly, weekly, or constant. For mortgage loans, banks use the regular reducing balance formula to quantify interest. Some mortgage financing providers, on the other hand, calculate interest on a home loan using the monthly form. In general, home loans are long-term loans, so it's crucial to find out the total interest obligation upfront. 

Either of the two methods mentioned below can be used to measure the same -

EMI Tracker : 

You should use a home loan EMI calculator to figure out how much interest you'll pay on your loan. 

You'll need to fill in the fields on the calculator with the following information :-

• Loan Repayment Amount of Home Loan 
• Interest Rate 
• Tenure of the loan 

After you've entered your details, press the 'Calculate' button to see a full breakdown of your debt, including the sum owed in interest.

EMI Calculation Formula : 

EMI = [P x r x (1+r)^n]/[(1+r)^n-1]

P is the principal, r is the interest rate, and n is the number of instalments or the loan term in months.financial organisations including banks in India provide residence loans to befitting applicants and earn in the form of interest that accrues on the loan.

One of the leading home loan's providers in the public sector is Syndicate bank. Syndicate bank has a vast and loyal clientele. Some customers have been using the bank's services for more than years. The reason for this customer preference is the excellent customer relations and consumer-friendly deals on debt and other banking services provided to them. Syndicate bank home loan is quite proffered by customers due to the ease of serviceability and no-hassle EMI payment options of the bank.

Also read this: Repayment options in Home Loan 

If you think without any preconceived notions or with the advice of a person having knowledge of loans and finance, then you might be able to understand that home loan can be your asset if you take it and use it wisely. People who are not able to fulfill their requirements against a loan generally spread this rumour of loans being a debt trap but if you look at the brighter side they can provide you with a lot of benefits turning your liability into asset in a very short period of time.

 Although it might be said and true that a home loan is an asset but the home itself is an asset to the borrower. The lender maintains a lienon the property, but you are considered to be the owner of the home till the time you pay your obligations and mortgages on time. Therefore, home is without a doubt an asset and you can always increase the value of your asset by making changes in it such as home improvement upgrades. 

By making improvements in your asset you can increase its value manifolds which can pay you back with good returns. In addition to that there is a lot of competition in today’s market, so has the competition in financial market which has turned out to be very beneficial for the borrowers as it has become easier for them to compare various benefits and conditions of different banks or lenders and then come to a conclusion of selecting the most suitable source.

Banks have made home loans easier to avail, that is, earlier conditions used to be quite rigid but now they have become very flexible. Banks provide reasonable flexible tenure, requiring minimal documentation processes. Home loan interest rates have also become much more convenient now.

Now, it is always advisable that one should take a home loan from trusted sources to avoid any sort of fraudulent activities and to get a better opinion with financial decisions. There are many banks and money lenders that make big promises while sanctioning loans and afterwards turn their backs on you, therefore never go to the lenders or banks that are not trustworthy. One such bank which has years of experience and is quite well known for its successful servicing of clients is Dena Bank. So, Dena Bank home loan is advisable for people who don’t have any trustworthy connections in these financial times. Dena bank provides you with services to avail a home loan without any hassle or stress. 

They provide you with interest rates that are convenient such as starting from 8% and onwards and if you have a good credit score then you might even get some other benefits in the rate of interest. They charge minimal processing fees that are quite transparent. They have quite a good tenure structure that can be changed as per your convenience providing you a loan of up to 30 years. They also ask for some minimum eligibility criteria which can be easily fulfilled. Then, they require some documentation processes to be done such as:

• Identity proof, that includes, PAN card, driving licence, voter ID, Valid passport etc.
  
  
• Address proof, that includes, electricity bills, water bills, telephone bills, Aadhar card, PAN card, driving licence, voter ID, Valid passport etc.
  
  
• Income proof, for self employed and salaried individuals, this includes the salary slips or Form 60, bank account statements of the last 6 months etc.
  
  
• Other necessary documents such as passport size photographs, proof of 5 years of business continuity (for self employed individuals) etc. 

One should always remember to carry the original copy of the documents along with the photocopied documents so that the process can be easily done.

Also read this: Benefits Of Home Loan