What Importance Does Home Loan Interest Rates Hold While taking a Home Loan?

Owning a home is a big thing for people living in a country like India. You must be wondering why? Well, you can ask some of the individuals who are looking to buy one. They will tell you their experiences of hefty prices, high brokerage, and many other problems they faced. To make the process of owning their homes a bit easy for them, there are several banks and housing finance companies that provide home loan to the customers. But there is one thing that remains as the number one factor before taking it - Home loan interest rates.

Without considering it, an individual may have to face a lot of difficulty in the repayment of the loan amount as home loan interest rates affect your EMI directly. If you do not know, EMI is the monthly installment that you have to pay in order to repay the loan back and it is made up of principal and interest amount. So if you do not consider the interest rate before opting for a home loan, then it could be very difficult for you to manage your finances also. In this article, we will be telling you about the factors related to interest rates so that you can have a better understanding of it and make a better decision.

How to Calculate the Home Loan Interest Rates?

In order to calculate the home loan interest rates, you can use the Home Loan EMI Calculator. You just need a few details in order to get the desired result. These are the principal amount, rate of interest, and tenure. As soon as you feed them, you will get the EMI amount, interest amount, and total payable amount. This is a fantastic tool to get the interest rate in an hassle-free manner.

Which type of Interest Rate would be better for you to opt for?

When you opt for a home loan facility, there are mainly two types of home loan interest rates that you can opt for - Fixed and Floating Interest Rate. Both have pros and cons. Below, you can have a detailed look at both of them.

• Fixed-Rate of Interest: This kind of interest rate suits perfectly to those who want to keep their EMI amount constant for their tenor. As the name suggests, the rate of interest remains fixed for your whole tenure, which makes your EMIs constant during your loan period. In this type of interest rate, you don’t have to worry about the market fluctuations.
• Floating Rate of Interest: With this type, the interest rate on your home loan can vary with the fluctuating market conditions and according to the RBI’s monetary policy. It can both increase and decrease during your home loan tenor and with that, your EMIs can also increase or decrease with the varying interest rate. The only perk with this type of interest rate is that you don’t have to pay any charges on foreclosure and part-prepayment.

How can you decrease your burden of Home Loan Interest Rates?

The first thing that you can do to decrease the burden of interest rates is to choose a lower interest rate that is within your repayment capability so that you won’t find it difficult to repay the amount regularly. You can also choose to pay the loan amount with more number of EMIs so that your total payable amount decrease as compared to a lesser number of EMIs.