Buying a home in this day and age is not easy, and it never will be. But thanks to home loans and low interest rates in 2022, you may be able to buy your dream home with the help of a home loan. But you should be aware that home loans can have a big effect on your life in the long run. When you take out a home loan, the interest rate you agree to will determine how well off or bad off you will be financially for many years to come. So that you don’t have to worry about money for the rest of your life, it’s important to find the right EMI amount that is not only affordable but also helps you borrow smartly. Tools like the ICICI Home Loan EMI Calculator and the LIC Home Loan EMI Calculator can help you figure out how much you spend each month.
The home loan interest rate, along with a few other things, is what will determine how much you have to pay each month.
Tenure of the housing loan: Did you know that loans with a shorter length of time pay less interest? It does have higher monthly payments than loans with a longer term, which have lower monthly payments but a higher interest rate. Use the ICICI Home Loan EMI Calculator and the LIC Home Loan EMI Calculator to figure out the best length of time for your loan.
Type of interest rate you choose: If you don’t want your home loan’s interest rate to change with the market, you can get a fixed-rate housing loan. This way, your home loan’s interest rate won’t change with the economy or the market. It also gives you a chance to relax and plan your repayment with a lot of certainties. But one thing to keep in mind is that with fixed interest rates, you may have to pay penalties if you pay off your loan early. If the repo rate goes down, you can save money on loans with variable rates. But if you choose this option, the interest rate on your home loan could go up, which would put more pressure on your budget. If you can handle this uncertainty, this option is for you, and you won’t have to pay any penalties for paying it off early. You can use the LIC Home Loan EMI Calculator or another EMI calculator to find out.
Your current financial profile: Do you know that lenders can charge a risk premium based on your profile? In short, the riskier you are as a borrower, the more you will have to pay to make up for the risk. There are a few ways to lessen the risk of lending, which are: Keep your CIIBL score above 750, as this shows that you can be trusted with credit and have paid your bills on time in the past. Another way is to only use 30% of your credit cards. Lenders look closely at how stable your income is and how strong your profile is. People who work in government, medicine, or accounting are thought to be low-risk, so they get a good interest rate.
Property’s resale value: You should know that the interest rate on a home loan changes depending on where the property is. Things like the condition of the house, its location, the number of amenities, etc. Properties that are new and have a high resale value will naturally have lower interest rates because they are less risky to lend on. This is because it is easy to sell high-value properties if a person can’t pay their home loan.
Loan amount to be taken: Most banks charge more interest on loans with larger amounts. So, if you want to pay less on your EMIs, you should make a bigger down payment.
MCLR rates are the minimum interest rate at which a bank can lend money. They are based on the marginal cost of funds. The MCLR rate also depends on operating costs, the marginal cost of funds, as well as the cash reserve ratio (CRR). You should know that banks review the MCLR every year when it is reset. This means that your interest rate will change based on how the MCLR rate changes.
When you apply with a co-applicant, your chances of getting a home loan with a lower interest rate go up. When you have a co-applicant, the bank or NBFC knows that at least one of you will pay back the loan, so they may be willing to give you a home loan with a lower interest rate than before. Using the LIC Home Loan EMI Calculator or their ICICI Home Loan EMI Calculator, you can see what the difference is between applying with or without a co-applicant.
Whether or not you should take out a home loan depends on how much you will have to pay each month. LIC Home Loan EMI Calculator, ICICI Home Loan EMI Calculator, or any other EMI calculator on the lender’s website can help you figure out if you can afford the loan. Doing this before you apply for a loan helps you figure out how much money you’ll have to pay each month. The right amount of EMIs helps you pay back the principal and interest amount in a way that doesn’t and shouldn’t put a strain on your monthly budget. It also helps you save for emergencies and fulfils your home loan obligation.
But the interest rate has a big effect on how much you pay through EMI. The interest rate is also affected by many things you can’t change, like the economy and inflation. It is the interest rate that you can change. Keep the above things in mind to make sure you get the best loan for your budget and needs, and utilize the EMI calculator tool to the fullest, too, as it benefits in the process of finalizing the right EMI amount which does not harm or put pressure on your financial health.