by Shreekant Rao
Published Tue, Mar 28th 2017, 18:05 | Finance
One of the most important concerns while availing a housing loan is the interest rates at which the loan is offered by lender. It helps in selecting your lender to a great extent. Borrower is also concerned whether the loan should be taken at fixed rate of a floating rate.
Ideally, fixed rate loan are the ones where the rates remain constant throughout the loan period, while in floating rate loans, the rates very every year on market prevailing conditions, government policies and other economical parameters. Also, each bank or finance company has its own methodology to fix this base rate. These rates have to be declared by the bank or finance company at every quarter.
Experts’ advice, the call on choosing home loan interest rates depends much on government reforms and moves initiated by private players. If you expect the rates to rise then you borrow at a fixed interest rates so that you look the loan at your desired interest rate and if the rates are expected to fall then borrow at floating rates so that you can enjoy the benefits of lower interest rates.
Fixed and floating rates have their own advantages and disadvantages. Fixed loan rates are generally price at higher than floating rate. This is because in fixed rates bank or finance companies are willing to take more risk of bearing the hiked prices but offering you the loan at same interest rates. Therefore, there are on slightly high terms.
Some private finance companies have come up with adjustable rate of home loan under which you may opt for home loan interest rates that is fixed for 2, 3 or 10 years, after which it gets converted to an adjustable rate, adding to your total of around 20 years.
When a borrower chooses a fixed rate loan he or she presumes that he or she will able to plan finances better as the monthly installment remains constant. Any modifications will lead to distraction in their monthly finances and budget allocation.
Before, taking a loan or planning to take one, check with the bank or finance company about the reset clause and be prepared for the additional burden that you might have to face during loan tenure. It is rare but some financial companies offer loans that are truly fixed without any reset clause. So, if you really sure that you want to go for fixed rate loan you can approach such firms.
Once you calculate the Housing Loan Interest rate that you can afford, EMI set, processing fees and other charges applicable, you can visit the lender site find the required documents, and fill up the application form. Attach with the form you will have to attach scan and attach required documents along with your application form once the lender verifies the documents and within a week’s time the amount will get disbursed in the account if things are in place. You can download the forms on your computers, PDA, or smartphones. At the comfort of sitting in your house or office, you can check different loan companies, find out the estimated/projected interest rates, repayment options, make loan application, etc. Just insert the loan requirement in the respective column and being your calculations. It will save you time and valuable energy as well.