Get a Home Loan With a Fixed Home Loan Interest Rate

Getting a home loan is desirable in case you want to own your own dream home. However, given the plethora of lenders and loan options available, it can be quite overwhelming to understand which ones are the best for your requirements.

A lot of crucial factors must be considered before making the loan and property purchase because after all, it is not every day that you would buy a house. One of the most sought-after home loan types is the fixed home loan. What does it mean and what benefits does it offer? Read on to find more details. Furthermore, there is also a low home loan interest rate which makes it a progresive option.

What is a fixed rate home loan?

When you sign up for a loan agreement, it has conditions such as tenure and market conditions in it. This means several factors would affect the rate of interest and the total amount you eventually end up paying – leaving you at the mercy of external variables.

With a fixed-rate home loan, this is not the case. You would have to pay the same amount of monthly instalments each time, despite the prevailing market conditions or tenure. Banks usually use the initial period to settle the interest and the later period to service the remaining principal on the loan. On the other hand, the floating rate home loan offers a flexible interest rate according to market variations. It can get both higher and lower depending on price volatility.

Benefits of fixed-rate home loans

You would only pay a fixed amount each month, despite price fluctuations in the market, enabling you to plan your finances better. This helps not only in your monthly budgeting – assuming you would know what amount gets deducted when; but also ensures your financial security.

How can you take a fixed rate home loan?

First things first, you should compare all lenders, banks and their respective offers to find out which deal is the best for you. Try online EMI calculators available on bank websites and enter your information – that should give you a fair idea of how much would you end up paying in the end. Generally, the rate of interests for fixed home loans varies from 7% to 13% between different banks in India.

Now, the second important step would be to check with your bank about their offerings – do they give you a fixed rate option or not. Every lender would not offer this all year round and hence, it is better to check with them real-time. If they do not, you can always switch the service provider.

Sometimes, the bank gives you a choice between the two loan types. In such a case, do not rush into the process of decision making. Make a careful comparison between the two, based on your risk-taking capacity – floating rates offer high risk and a chance of more rewards while fixed ones offer peace of mind. Some of the major banks that offer fixed-rate home loans are HSBC, HDFC and Axis bank.

Eligibility

Variables such as age, guarantees, net income and number of working years remaining amongst others decide your creditworthiness. Your credit score and credit history is also essential if you want things to move in your favour.

Simple but useful things such as keeping old using cards and paying your credit card bills on time would move your numbers towards the ‘excellent’ CIBIL score of 900, much desired by most of us. Anything above 750 would clear your way towards a home loan. Lower scores may get you rejection or very high-interest rates and hence, try and fix your debts before you think of applying for that loan.

Banks keep an age limit of 21 – 65 years as the bracket for eligible applications and things such as minimum monthly incomes fluctuates from lender to lender.

Getting ready

The successful execution of any home loan – fixed or floating should be preceded by meticulous planning. Make sure you have all the necessary documents on hand before approaching the lender for the final application procedure. Some of the commonly required documents would be proof of identity, proof of address, Aadhar card, salary slips and bank statements from the last 2-3 months and evidence of financial health.

The above information should clarify most of your doubts on finding the right loan type for you and how to get the best offer on a fixed rate home loan. Make sure you use all the right tools, information and repositories to reach an informed decision on your home loan.