A Few Guidelines to Get Home Loan at Minimum Interest

A Few Guidelines to Get Home Loan at Minimum Interest

How to avail a Home Loan and that too at a low-interest rate is the first thing that comes to your mind when we talk about a Home Loan. 

Buying a house is not only a dream but also a big task for every person. Home Loan facilities have made it easier for you to buy a house now.

People are often reluctant in applying for a Home Loan because of the high-interest rates and repayment method. Let us discuss ways in which you can get a Home Loan at minimum interest.

3    Ways to Help You Get Affordable Home Loan Rates

1. Pradhan Mantri Awas Yojana (PMAY) - Credit Linked Subsidy Scheme (CLSS)

The Pradhan Mantri Awas Yojana (PMAY) Credit Linked Subsidy Scheme (CLSS) is a Home Loan scheme launched by the Indian Government. It benefits people belonging to the Economically Weaker Section, Low Income Group and Middle Income Group of society.

If you are availing this scheme, you get interest subsidy on the purchase, construction, extension, and improvement of a house or dwelling unit.

To avail of this scheme, you should not own a house already and this should be your first purchase. You can apply for CLSS through prime lending institutions.

2.  MCLR (Marginal Cost of Funds based Lending Rate)

MCLR has been introduced by the Reserve Bank of India to replace the base rate w.e.f. April 2016. It is a system under which the interest rate is fixed according to the riskiness of the customer. It is the internal benchmark lending rate and is compulsory for all the banks.

MCLR ensures bank credit at fair interest rates. Repo rate is used in the calculation of MCLR and this is why MCLR is revised every month to incorporate any changes in the repo rate.

Even if you have taken a Home Loan prior to April 2016, you can still switch from base rate to MCLR facility.

3. EMI Calculation

The amount of your monthly EMI plays an important role in making your Home Loan cheaper. The smaller the EMI, the longer the repayment period. The longer the repayment period, the expensive the loan because a long repayment period increases the amount to be repaid in the form of interest.

Hence, EMI calculation is vital for your loan planning. You can calculate your EMI online using Home Loan EMI calculator. This calculator requires a few basic details about your Home Loan and your repayment capacity to calculate the optimum EMI for your loan.

Later on, you can reduce your monthly instalment by making pre-payment or part-payment for which lending institutions do not charge any fees generally.

The Bottom Line

Every borrower has a different Housing Loan requirement. Whatever may be your need, but you would always like to get a Housing Loan at the cheapest rate. Proper EMI calculation and availing CLSS and MCLR can help you in getting a Home Loan at a minimum interest rate.

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