The real estate industry of India seems to have taken up the pace again in 2019, after a relatively slow turn around in recent years. The segment recorded an ₹ 17,600 crore investment during the 1st quarter of FY19, according to data from a leading consulting company. Sequence-wise, the figure for the largest investment in real estate in more than a decade is more than 100% higher than last year.
It gives an excellent advantage to the realtors of this country and stresses public trust in the sector. More and more people are again investing in homes and real estate, mainly through options for house financing. It is essential to understand how you can benefit from the lowest home loan interest rate. For doing that, it is crucial to keep an eye on the repo rate announced each quarter by the RBI after the implementation of the MCLR. The rate fluctuations would have a proportionate effect on the lending rates of domestic loans.
What are the Figures you should look out?
- 4.00% – Policy Repo Rate.
- 3.35% – Reverse Repo Rate.
- 6.20% – 15.00% – Current MCLR.
- 1.47 billion – 2018 investments in private equity and venture capital (in USD)
What are the ways to reduce Home Loan Interest Rate?
- Home loans are usually of high-value with long tenures. As such, any change in the interest rate will have far-reaching consequences on the overall cost of the loan. For instance –
- For a loan amount of ₹ 1 crore at 8.5% rate of interest will incur a cumulative interest rate of ₹ 1, 08, 27,757. When the rate of interest is raised by just 0.10 per cent, there is a rise in the total interest which is ₹ 1,09,79,905, approximately ₹ 1.5 lakh higher than the previous number.
- It is also essential to use the lowest interest rate on domestic loans to ease the repayment burden.
Here are some tips for reducing the interest rate on your home loan.
- You must maintain a Healthy Credit Score
There is a common misunderstanding that your credit score is not as important to your loan eligibility as it is for unsecured loans. Although the argument is credible in that lenders are generally lax in their acceptance of home loans for persons with generally low credit scores, the implications are felt evidently on the interest rates offered. The lenders often charge a higher interest rate for people who have not a credit score higher than 750.
- Choose a Balance Transfer Facility
Most lenders provide the option for the balance transfer on home loans. Using a home loan balance conversion service, you can convert your unpaid loan sum to a new lender at a lower interest rate.
- Look to avail Government Subsidies on the interest rates of Home Loan
- Government measures like the Pradhan Mantri Awas Yojana (PMAY) and the MahaRERA Act have been serving as catalysts in the amplified growth trajectory in the real estate sector in recent times.
- PMAY, particularly for the EWS and MIG groups, dramatically reduced the cost of availing of home loans. The programme allows applicants to use up to 6.50% of interest subsidy for their home loans for up to 20 years of the term. The maximum subsidy amount varies from ₹ 2.2 to ₹ 2.65 Lakh depending on the economic group the applicants fall under.
- Choice Between Fixed and Floating Rates of Interest
The floating interest rate is typically several percentage points below the fixed rate. In addition, the repo rate has been decreased by the RBI. It stands at 4.00 per cent, which is why lenders are proportionally lowering their floating interest rate.
- Select Your Lender Wisely after carefully going through recommendations
The same interest rate on home loans does not extend to all lenders. Before you finalize your lender, you should compare the interest rates of various lenders. Many lenders offer the lowest interest rates on home loans.
Top banks for home loan in India
| Bank | Interest Rates | Lowest EMI Per Lakh for Maximum Tenure |
| SBI Home Loan | 6.95% | ₹ 661.95 |
| HDFC Home Loan | 6.90% | ₹ 658.6 |
| Bank of Baroda | 7.00% | ₹ 665.3 |
| Citibank | 7.05% | ₹ 709.97 |
| ICICI Bank | 6.90% | ₹ 658.6 |
| Axis Bank | 6.90% | ₹ 658.6 |
| PNB Housing Finance | 8.60% | ₹ 776.01 |
| LIC Housing Finance | 6.90% | ₹ 658.6 |
| Indiabulls | 9.25% | ₹ 856.38 |
| DBS bank | 7.30% | ₹ 793.41 |
Conclusion: Initiatives like PMAY were brought together by investor participation and government, bringing new life to the real estate sector of India and subsequently growing demand for home loans. With this guide, you can fulfil your dream of becoming a homeowner by getting a home loan with the lowest rate of interest.