Those days are long gone when you had to wait for long months to get your loan disbursed. Now you can easily get home loan without any further difficulties. As a borrower some things are required from your side and rest, the bank will take care. At the initial steps, you need to keep your documents and other pre-requisite demands handy because the bank can ask for it anytime. Home loan interest rates vary from bank to bank but there are some other factors that helps in determining your Rate of Interest. There are two types of loan interest rates;
Floating ROI & Fixed ROI
First, Let’s have a fair idea of how these two rates differ from each other :-
Fixed interest rates stands for fixed EMIs that you pay on your home loan. Interest rate remains fixed which are not affected by the market fluctuations.
On the other hand, Floating interest rates are Dependant on the base rate and when the base rate of the respective bank changes, the interest rates also varies.
There is a difference between the interest rate of these two, The fixed rate of interest are usually higher than the floating interest rates.
For example, If a borrower wants to take home loan of ₹ 35 Lakhs for a period of 10 Years at the current interest rates of any ‘XYZ’ Bank which is as follows :-
Fixed Rate – 10% per annum
Floating Rate – 8.50% per annum (It depends on the Banks MCLR)
Then, The difference in values of fixed and floating rate of interest are given in the table below :-
| FIXED | FLOATING | |
| Loan Amount | ₹35 Lakhs | ₹35 Lakhs |
| Rate of Interest | 10.00% | 8.50% |
| Tenure | 15 Years | 15 Years |
| Monthly Installments | ₹37,611.00 | ₹34,466.00 |
| Total Interest Amount | ₹32,70,012.00 | ₹27,03,859.00 |
| Total Amount (Principal + Amount) | ₹67,70,012.00 | ₹62,03,859.00 |
One way in which the interest rate vary is in the form of different interest rate types (discussed above). Now that you know the two types of interest rates, it’s time to know how you can get home loan at low interest rates.
The home loan rates vary for a new customer and existing bank customers. For ‘Women’ the interest rates are usually lower than for ‘Others’. For example, SBI Home Loan the current interest rates for women is 8.30% (Upto ₹ 30 Lakhs) and for Others it is 8.35% (Upto ₹ 30 Lakhs).
Similarly, If you have an ideal credit score and satisfactory documents according to the bank norms, then you can easily negotiate with the bank regarding your interest rate.
The interest rate are also dependant on the loan amount you want to borrow. Every bank has it’s own interest rate sheet in which the loan amount is mentioned along with the categories.
If you are a salaried individual you are more likely to get lower interest rate than self – employed individuals. Banks require salary slips, minimum net monthly income and other employment related information of the borrower to disburse loan.
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