Currently, financial institutions link their home loan interest rates to the repo rate of RBI. This rate is called the Repo Linked Lending Rate (RLLR). The home loan interest rate depends on RBI’s repo rate and since RBI slashed its repo rate, the home loan interest rate has also been lowered consequently.
So, now if you apply for a home loan, the interest rate would be linked to the repo rate and a lower repo rate would give you a lower rate of interest.
The fixed rate of interest for a Home Loan promise a fixed rate for the entire tenure while a floating rate of interest, it is marked to the market rates. The floating-rate loans give uncertainty on the rate of interest over the loan tenure while the fixed rate can prove to be expensive especially in a falling home loan scenario such as now.
However, you might not need the entire amount at one go. Payment for houses, especially under construction, needs to be done in phases. To overcome both these rate concerns and yet make the most of your home loan, you could also opt for Home Saver option wherein your home loan would be lighter on your pockets. Under this option, you need to pay the interest only on the amount utilized and not for the entire loan amount! You could transfer your existing home loans to this option as well. The Home Saver option calculates the interest on the daily balance along with re-finance options within 6 months of the property purchase as well as insurance coverage.
Besides the low-interest rates, here are some reasons why this is the best time to apply for a home loan
- Since the interest rates are low, the EMIs would be lower making the home loan You can, therefore, opt for a higher quantum of loan, if needed and still afford the associated EMI.
- When the home loan EMIs are lower and affordable, the chances of repayment default reduce considerably. This allows you to maintain a clean credit report and also save on the interest cost which occurs if you default on repayment.
- Lastly, in the current Union Budget 2021, the Finance Minister extended the tax benefit on the affordable housing scheme for another year. Thus, if you buy a home whose stamp duty value is up to INR 45 lakhs, you can avail of an additional deduction under Section 80EEA of the Income Tax Act, 1961 on the home loan interest paid.
The RBI might reduce the repo rates further in future or increase them as the economy recovers post this pandemic. Why wait for the uncertain future when you can avail of home loan with low interest rate now?
With rates below the 8% mark, this is the best time to invest in the home of your dreams. Compare the loan interest rates of different lenders and choose the lender that offers the home loan lowest interest rate and invest in your own home by applying for a Home Loan . You can fulfil your dream of owning a home and create a property in your name and also save on the interest costs and get a pocket-friendly loan. Why wait? The home of your dreams is calling on you. Apply for a Home Loan and get the benefit of reduced rates.
