- Home loans on floating interest rates don’t attract prepayment penalties
- You can avail a home loan from NBFCs too
- A home loan’s tenor affects the interest outgo
- Bajaj Finserv Flexi Hybrid Loan offers a principal holiday period of 4 years
Following the hike in repo rate, home loan interest rates have started climbing. Most financial institutions have already spiked their rates, making home loans dearer. At a time when the housing segment was slowly getting on track following months of sluggish growth post demonetization, home loans becoming expensive is seen as a dampener. However, knowing these secrets would help you overcome the effects of rising interest rates and seal the best-possible deal.
Home loans are available on floating interest rates
Note that home loans are available on floating interest rates which change with the market dynamics. If you opt for a home loan on a fixed rate, the rate of interest remains constant throughout the loan tenor. Hence, even if rates are slashed, you as a borrower can’t get the benefits of a reduced interest rate.
Also, floating interest rates are relatively cheaper than fixed rates. Notably, even if floating rates go higher than the fixed rate, it’s not for the entire loan tenor, but for some period. Hence, opting for a home loan on a floating rate results in significant savings.
NBFCs too disburse home loans
Today, you can avail home loans not only from housing finance companies and banks but also from non-banking financial companies (NBFCs). A high loan amount coupled with flexible repayment tenor and competitive home loan interest rate is helping NBFCs make their mark in the home loan segment.
With easy documentation and quick disbursal, NBFCs are the preferred choice for most customers. Also, you can expect lending norms to be slightly relaxed when it comes to procuring a home loan from NBFCs.
The tenor of the loan affects the interest outgo
Often in order to reduce EMIs, borrowers opt for a long tenor. However, a long tenor increases the interest outflow. On the other hand, a loan taken on a short tenor, may increase the EMI, but keeps a tight cushion on the interest outgo, resulting in significant savings in the long run.
Since home loans are long-term commitments, make sure to choose a tenor that not only helps you to conveniently repay the loan but also curbs the interest outgo. You can know the EMIs to be paid each month with the help of this home loan EMI calculator.
Prepayment of home loans helps lower EMIs and tenor
Home loans are long-term commitments where you need to pay EMIs for several years. Also, during the initial period, the interest component is higher than the principal. Prepayment of home loans reduces the principal, thereby lowering the EMIs and reducing the loan tenor.
You can always prepay a portion of the home loan on generating a surplus. Also, note that home loans availed on floating interest rates are devoid of prepayment charges. When you apply for home loan, do find out about prepayment penalties from your lender. You can also increase a certain percentage of your EMI per annum to repay the home loan faster.
Principal holiday period is available on home loans
New-age home loans such as Bajaj Finserv Flexi Hybrid Home Loan offers you the flexibility to pay only interest as EMIs for the initial 4 years of the loan tenor. Thus, you get a principal holiday period of 4 years. It means only after 4 years, the EMIs will constitute the principal component. Also, this loan allows you to part pay and foreclose the loan amount without any additional charges.
Also, with pre-approved offers from Bajaj Finserv, availing finance on a gamut of loans including home loan is quick and easy. These offers cut down the lengthy process of availing loans. Share a few basic details to know about your pre-approved offer.