Property prices today are rising at an alarming rate. Opting for a home loan can be the smartest decision in case you are short on funds when buying a house for you and your family, or while renovating it.
A lot of financial institutions, offer home loans at affordable interest rates. But, to avail such advances, there are certain conditions which an applicant has to meet. To understand properly, it is essential to know about the various factors which affect the EMI for such loans along with knowing how to calculate home loan EMIs and many more.
Factors Which Affect the Home Loan EMIs
Following are some of the factors which have an impact on the home loan.
Fluctuations in Interest Rates
It is one of the main factors which affect the EMIs for a housing loan. It can be applied to floating interests, which changes following the market. These fluctuations may have both positive or negative impacts on the EMI for home loans. The interest may vary based on the changes made to the base rate or the MCLR by the RBI.
A credit score is another important factor which affects the change in EMIs for such loans. Knowing how a credit score can affect home loan EMIs can help an individual avail better rates of interest. If he/she is having a credit score below 750, the EMIs may be comparatively higher. On the contrary, higher CIBIL scores will allow the lender to offer lower rates of interest.
It is possible to avail a home loan with attractive loan interests with a low credit score. However, it can be quite difficult. The interest rates for individuals with low credit score and those with a high credit score usually varies from around 0.25% to 1.5%. The difference may not be much, but if you know how to calculate home loan EMIs you can see that it results in a considerable increase in the total cost of the loan.
Prepaying your Home Loan Principal Amount
Home loan providers allow their customers to do pre-payments towards their housing loan. A lot of the lenders generally charge a percentage on the principal amount as a prepayment penalty. When an individual opts for a prepayment, there is a decrease in the outstanding amount which results in a reduction of the EMI or the repayment tenor. However, checking the terms and conditions before the home loan agreement is signed with the lender is essential.
Borrowers can also opt to invest the additional funds in other financial schemes as well. If the interest earned via other investment schemes is more than what you save by pre-paying, then opting for pre-payments is not profitable.
Knowing how to calculate home loan EMI is also essential along with remembering the above factors when applying for a home loan. Use an EMI calculator before applying to plan your repayments in advance. This result is minimising chances of default. Knowing the EMIs will also allow customers to try and negotiate on the interest rates which will eventually cut down the EMI amount and reduce the financial burden.
The easy-to-meet eligibility criteria from Bajaj Finserv and minimum documents required for a Home Loan have made the entire process hassle-free. Avail a loan today and own your dream home in no time.