The Gospel of great interest on Home Finance Loan - Fund - Loans

Have you not been impulsive with a call that you received 1 lazy afternoon, a sweet voice from the other finish providing you, wella Dwelling loan at lower interest rates. If you think applying for housing finance is as uncomplicated as shopping in a mall, as portrayed on the tube, you are grossly mistaken.

Here are a few basics that you should arm oneself with hitherto applying for the right dwelling loan that suits you.

Interest

Interest on dwelling loan is a sum of money that you pay over and above the actual cost of your home and the processing fee. Housing loan interest rate is a crucial element which acts as the deciding factor to narrow down on the institution or bank you apply a loan for.

Rate of interest, the tenure of your loan and the total loan amount types the basis on which your EMI is factored. A thumb rule which absolutely everyone have to bear in thoughts when deciding on from a number of EMI options. The lower the interest rate, the lower is the EMI amount and vice-versa.

Yes, you got it suitable! A bank with low interest rate will be instrumental in escalating your savings each month.

But hold on!!!

Selecting a housing finance scheme merely on the basis of higher/lower rate of interest is not the most prudent factor to do. There surely are a variety of significantly more components that weigh in.

There are two kinds of dwelling loan interest rates.

Fixed rate of interest- the name says it all, you pay the similar amount as EMI for the complete duration of the loan that was agreed upon.

Floating rate of interest- this kind of interest rate depends on the bank's benchmarked rate. The alterations in this rate are at the discretion of the bank/monetary institution from which you have availed your dwelling loan.

A different aspect of calculating the EMI that 1 have to be cognizant of is the 2 systems.

Flat rate - In this system, the interest rate on the amount of loan is calculated over the complete tenure of the loan, the interest and the principal is divided across the number of your EMI installment. This kind of EMIs on dwelling loan is the costliest as you will recognize that the interest is calculated on the full amount and no deduction in the principal amount is deemed.

Reducing balance method-in this situation, the interest is levied on the remaining balance of the dwelling loan, which goes on dipping.