Friday 28 December 2012

WHY SHOULD WE GO FOR HOME LOAN ?


Nowadays when the rate of real estate properties is continuously increasing day by day and when having a home is becoming a dream for every salaried person, home loans have performed a very vital part in completing one's dream of having a home. Every such man who is salaried or having a fixed income cannot think about buying a home by savings only. In that condition borrowing a home loan is a very good option because it not just brings you a home but it also directs you towards completion of loan liability in the form of EMI (Equal Monthly Installments) which will also develop the habit of saving a part of your income.


What is exactly a Home Loan?

Home Loan simply means borrowing money from any bank or financial company at an interest rate to purchase a home. But nowadays home loans are not only limited to purchasing a home. Now the competition has increased in Banking and financial industry. To beat the competition this sector has broadened the term “Home Loan”. Now every bank has several specified options to cater the varying needs of their customer.

According to customer's different needs, banks offer following types of home loans :

1) Loan for Purchasing a Home
2) Loan for Home Repairing
3) Loan for Home construction
4) Loan for additional construction
5) Loan for purchasing land
6) Loan for Home furnishing and consumer durables

Beyond this, some bank also offers additional benefits if you are taking bank loan from them . These are:

1) Customer Privileges: If you are an existing home loan customer you can avail other loans such as Car loan, Two Wheeler Loan, Personal Loan at very low interest rates.

2) Term assurance plans: Insurance Company also provides term assurance plan, in which your loan term period is covered under a plan which is a guarantee of your loan payment in an assured period in case of any mishappening with insured.

Home Loan Interest Rate: Banks and financial company charge interest over the loan amount. Interest rates are different for different types of loans. The rate of different types of loans such as a car loan, education loan, home loan, personal loan basically depends on the amount of loan. Also different banks charge different interest rates for same type of loan, although the difference would not be too much. Due to increasing competition in the banking sector, customers get the benefit in the form customer support, value to customer, financial transparency, good treatment and some other privileges benefits.

Banks fixed their interest rates which is not less than their base rate. Now if we are talking about base rate then it is the interest rate decided by a bank that the bank cannot lend loans below this interest rate. Banks fix base rate by choosing benchmark but at the same time it has to be transparent.

Every bank has its own base rate in which banks add administrative cost and margin to fix interest rates for tenure of time.

Banks have two ways to charge interest one is Fixed Interest rate and other is Floating Interest loans.

Fixed Interest Rate: Fixed interest rates are fixed over the tenure and are not affected by changing policies.

Floating Interest Rate: Floating Interest rates are that interest rates which floats according to changing policies.

Banks fixed interest rates are oftenly higher than floating interest rates.

Here are the some major bank interest rates:

SBI Home Loan

Loan Amount
Interest Rate

Base Rate : 9.75%
Upto Rs. 30 lacs
10.00% pa
Above Rs. 30 lacs
10.15% pa


ICICI Home Loan


Loan Amount
Scheme I
Scheme II
Scheme III
Upto Rs. 30 lacs
10.25% (Fixed 1 yr)
 
10.25% (Fixed 2yrs)

10.50% (Fixed 3yrs)
then 10.25%
From Rs. 30 lacs to 75 lacs
10.50% (Fixed 1 yr)

10.50% (Fixed 2yrs)

10.75% (Fixed 3yrs)
then 10.50%
Above 75 lacs
10.50% (Fixed 1 yr)

10.50% (Fixed 2yrs)

10.75% (Fixed 3yrs)
then 10.50%


HDFC Home Loan


Loan Amount
Scheme I
Scheme II
Upto and including Rs. 30 lacs
10.75% (Upto 10Lacs) (Fixed for 10yrs), then 11%
10.25%
Above Rs. 30 lacs to 75 lacs
11% (Upto 10Lacs) (Fixed for 10yrs), then 11.25%
10.50%
Above 75 lacs
11% (Upto 10Lacs) (Fixed for 10yrs), then 11.25%
10.50%



This data has been provided only for informational and advisory purpose.

Good Luck...