Home Loan Interest Rates

One of the biggest financial commitments one makes in a lifetime is to purchase a house. A large majority of people planning to buy a home turn towards a Home Loan for finances to get the property of their choice. This is why, buying a home involves more than just a long term and considerable commitment – it is a financial investment that needs to be well thought out and planned to the T, as most people will spend around 15-20 years of their lives repaying the home loan. If you have been searching around the town looking for the perfect home to make your own, it’s advisable to take some time and find the perfect home loan at the best interest rates as well.

 

The interest rate on Home Loans is one of the largest factors that affects the overall cost of your home loan. Since the amount involved is quite substantial, the interest rate on home loan spells long-term financial implications on the borrowers. A borrower always looks for lowest interest rate on home loan so that they can realize this dream of owning a home without being too overwhelmed with the loan payout.

 

Besides home loan interest rate, there are other factors too in the play that make up the total cost of your home loan. These may include home loan processing fees, prepayment charges, and CERSAI. It is extremely critical to be aware of and understand these additional costs so that you can select the best offer with lowest home loan interest rate.

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Home Loan

Before digging further, let’s understand the types of home loan interest rates offered.

 

 

Types of Interest Rates

 

Broadly speaking, there are only two types of home loan interest rate offered by lenders – fixed and floating.:

 

    • Fixed Interest Rate on Home Loan – As simple as it sounds, a fixed rate of interest on home loan remains fixed during the entire loan tenor. The biggest benefit of a fixed rate of interest is that the borrowers know right in the beginning of the home loan about the total interest they will end up paying.This also helps them plan their repayment options while managing their finances effectively. A fixed rate of interest is beneficial in the cases where there are probabilities of an increase in the rate of interest on home loan.
    • Floating Rate of Interest on Home Loan – Just the opposite of fixed, floating interest rate on home loans doesn’t remain fixed and keeps fluctuating during the entire home loan tenor. The effective rate of interest is calculated based on the benchmark rate in housing finance that is decided by RBI (Reserve Bank of India). The floating interest can be beneficial for the borrowers in cases where the markets predict a downward trend in housing loan interest rates. Fixed rate of interest on home loan is usually 1-2% higher than the floating interest rate.

 

 

Factors Affecting Home Loan Interest Rates

 

The factors responsible for an increase or decrease in home loan interest rates in India are:

 

    • Borrower’s Financial Profile – Borrower’s income, credit score, employment status and more such factors are quite a catalyst in deciding the home loan interest rates. A higher credit score attracts lowest home loan interest rate and vice versa. Also, the rate of interest offered to the salaried individuals is usually lower than what’s offered to the self-employed ones because the salaried professionals have a stable salary which further eases the repayment ability.
    • Loan Amount – the housing loan amount that you’ve applied for also affects the rate of interest on home loan. If the amount of loan applied for is low, the rate of interest is low too and vice versa.
    • Type of Home Loan Interest Rate – As we discussed above, the interest rates offered on home loans is of two types – fixed and floating. The rate of interest and EMI is fixed and doesn’t change through out the entire loan tenor in case of fixed interest. While the floating rate of interest on home loans fluctuates (increases or decreases) as per the Repo rate which is decided by the Reserve Bank of India.
    • Loan to Value Ratio (LTV) – LTV is the maximum home loan sanctioned against the current estimated value of the property. If the LTV is higher, the rate of interest on home loan is higher too. If you want to cut down the home loan interest rate significantly, make sure you make a heavy down payment to decrease the loan quantum.
    • Loan Repayment Tenor – The home loan repayment tenor and the risk of loan amount extended by the lenders are directly related to each other. This equation translates into lower rate of interest for shorter repayment tenor and higher rate of interest for longer repayment tenor.

 

 

How to Avail Lowest Interest Rate for Home Loans?

 

There are no set rules that will assure you lowest home loan interest rates but following a few good practices can ensure good deals on interest rates. Some of these are:

 

    • Maintain an Excellent Credit Score (>750) – This is a no brainer that your credit score is the biggest indicator of your creditworthiness. Keeping a credit score above 750 would result in getting lowest home loan interest rates. Following the RBI guidelines, banks now consider credit score as the most important factor in fixing the rate of interest for borrowers. A higher credit score represents a responsible and consistently good credit behavior that helps immensely in availing the best offers on home loan interest rates.
    • Add a Co-applicant – Having a co-applicant on your home loan application increases your chances of availing best interest rate on home loans. Not just that, it also increases your home loan eligibility.
    • Make a Larger Down Payment – Committing or paying off a higher down payment towards the housing loan increases your chances of getting a home loan at a reduced interest rate as well. The risk associated with lending you a huge amount decreases when you make a heavy down payment, which is why the interest rate goes down

 

 

How to Keep the Home Loan Interest Rate Burden in Check?

 

There are many determinants to a home loan interest rate; the interest accumulation over the years is a result of these factors combined. Here are a few strategies to adopt to avoid feeling the burden of your home loan taking a toll on your finances:

 

    • Since home loans are long-term credit instruments up to even 20 or 30 years, this increases a lender’s risk in extending a higher loan amount. This is reflected as a higher rate of interest. On the other hand, though opting for a shorter home loan tenor will increase the EMI amount but the effective interest will reduce significantly. We suggest making a choice on the tenor based on your current financial standing and outlook.
    • Home loan borrowers can get the EMIs revised after salary hikes or even pay additional amounts periodically to reduce the outstanding balance. In the long run, this can decrease the home loan EMI amount and burden significantly.
    • If you find the current interest rate on home loan expensive for your budget, you can opt for a Home Loan Balance Transfer to migrate the loan to another lender that offers a lower interest rate. This can significantly cut down the home loan interest burden on the borrower.

 

 

Why Should You Choose Clix Capital for Home Loan?

 

Here’s why you should go for a home loan from us:

 

    • Easy home loans up to INR 1 crore.
    • Flexible repayment tenor of up to 25 years
    • A single home loan product for multiple requirements – purchasing a home, for home improvement, plot purchase & self-construction or top-up home loan.
    • Simplified documentation
    • Easy application process & hassle-free approval
    • Dual interest rate option – fixed interest rate for the first 2-3 years, followed by floating interest rate.

 

 

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What Documents Do I Need to Provide?

Completed Application Form

  • We will provide you with a run-of-the-mill application form to detail out all the information we need before processing your personal loan request.

Passport-Size Photograph

  • This photograph should be fairly recent and indicative of your current physical appearance.

Identity (ID) Proof

  • This can be either your Aadhaar Card, PAN Card, or Government ID (if you happen to be a government employee).

Address Proof

  • Your Aadhaar Card is the go-to document here. In case your current address is not updated in Aadhaar card, one certified copy of any Official Valid Document (OVD) is required. These OVDs are either your Passport, Voter ID, or Driving License.

Income Proof

  • This comes in the form of your latest one-month pay slip or Form 16 for the current year.

How Do I Apply For Personal Loan online from Clix Capital?

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FAQs

What is the minimum loan amount I can avail?

At Clix Housing, you can apply for a housing loan that ranges from 10 lakhs to 1 crore.

What will be the tenure and interest rate of my home loan?

At Clix Housing, we provide loans for a tenure of 15 years – however, this figure is dependent on the age and income of the borrower. Meanwhile, the standard interest rate on these loans is around 17%.

What security/collateral do I need to provide?

Generally speaking, the security that you need to provide for the loan is the first and exclusive charge of the property to be financed. In this situation, the deposit of title deeds and/or other such collateral security is to be done as deemed necessary. The title to the property should be clear, marketable and free from any encumbrances. The property should also be within geographical limits of the cities where Clix has a branch office.

What can be the end use of a home loan?

A housing loan can be used to

How do I avail a home loan from Clix?

There’s a space at the top and bottom of this page to put in your phone number. Just provide the same and our customer representative will speak with you shortly to get a home loan online!

What will be the tenure, EMI, and interest rate for my home loan?

At Clix Housing, you can choose from customised repayment (EMI) and down payment options. However, the interest rate of your home loan depends on various factors, such as the specifics of your application (including metrics like date and income). While Clix usually applies an interest rate of 17%, we’ll tell you the final applicable interest rate once we go through your application form and all supporting documents.

What are the different types of home loans offered by Clix Housing?

You can choose from the following types of loans:

    • Home loan for a ready or under-construction residential property.
    • Balance transfer and top-up on your existing loan from any other housing finance company or bank.
    • A home renovation loan for all your requirements pertaining to improving your house.

What is the concept of EMI?

You repay a loan in Equated Monthly Installments (EMIs) – an amount that combines your principal and interest. Your EMIs begin the month after your full loan amount is disbursed.

What is a pre-EMI?

The pre-EMI is the interest you paid on the loan amount you receive before your EMI period begins. This usually happens in either self-construction or construction stage-linked/partly-disbursed cases.

What is an amortisation schedule?

An amortisation schedule has details on how you can repay your loan, as well as the division between principal and interest charged in each EMI.

What governs my home loan repayment?

Your housing loan repayment is done through a NACH Debit Mandate.

What are the kinds of interest rates offered?

Clix Housing offers two kinds of interest rates:

    • Floating interest rate
    • Fixed interest rate for the first 2 to 3 years, followed by a floating interest rate

How can I reach out to Clix for any other information on my home loan?

Just call us on between 9:30am-6:30pm from Monday to Saturday (barring public holidays). Alternatively, you can also write to us at hello@clix.capital to resolve your queries around a non-home loan.

What if I have any other query when it comes to these loans?

It’s possible that some questions you might have aren’t answered in this FAQ. However, don’t worry – Clix has a Most Important Terms & Conditions (MITC) that you can read through to get all the clarity you would need on our loan structure. Please keep in mind that certain factors might vary based on the type of loan and our customer representative will clarify the same if need be.

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