How is the current scenario of the housing finance industry of the country?
The Government of India has introduced a series of radical and transformational reforms that have made a deep impact on the real estate industry. Demonetization, Real Estate Regulatory Bill (RERA), FDI relaxations, GST and Change in Accounting Standards (IFRS) among others will make it easy for a common man to buy a house.
Besides all of these benefits, the government has also introduced a revised repo rate in the month of August' 17 which marks a future for the housing finance industry, it is likely believed that this announcement will eventually lower down the interest rates on home loans.
What is the impact of this on the home loan interest rates in India?
Home loan interest rates in India is expected to show a positive curve in the coming years as a lot of policies are favoring the affordable housing sector. Like for e.g. the CLSS scheme by PMAY.
Currently, the housing finance market has a standardized interest rate at 8.35%* p.a. which has been stagnant since 2017. A lot of NBFCs and banks are offering a home loan at the same interest rate or below.
How is Reliance Home Finance optimizing their home loan rates based on its customer’s requirements?
At Reliance Home Finance Ltd., we manage portfolios with an optimum lending capacity based on the credit-worthiness of the customer; we offer the most suitable home loan rates based on the customer’s requirement and background. We are also offering a home loan interest rate of 8.35%* p.a. however, the ROI completely depends on the portfolio of the customer. We make sure that the customer is well informed about the offered interest rate on his/her home loan before we proceed with his application and disbursement. Once the customer e-signs his documents online, we are not in a position to help him/her with a desired interest rate in future. We also make sure we inform our customers whenever we announce a drop in the interest rates based on the market condition.
Our home loan interest rates are case specific and we aim to serve many SMEs and potential businesses that require a lender like us to help them leverage their dreams.
We understand owning a house is one of your most cherished dreams. And our home loan can help you fulfill that dream faster. So whether you are building a house, purchasing an apartment or buying a resale property, we will assist you with a reasonable housing loan interest rate.
How to know if the offered housing loan interest rate is ideal for you?
We suggest you to compare your home loan interest rates to evaluate your EMI and avail the one that fits best as per your requirement. To apply for a home loan, you must invest some time in researching the top housing finance companies in India and their USPs. With Reliance Home Finance; you get the benefit of getting your loan sanctioned in 48 hours and a competitive interest rate based on your profile.
Planning for your home loan is a very simple and an easy task, please visit our Home Loan EMI Calculator page to evaluate your monthly EMIs.
How do home loan interest rates impact your loan amount?
Your housing loan interest can end up costing a substantial amount of money if you don’t evaluate your EMI’s and principal interest before applying, so make sure you plan your disposable income and then calculate your EMIs. Make sure you consider all liabilities while you calculate your eligibility for you to be rest assured of your strength in paying your EMIs.
Understanding Home Loan Interest Rates and other definitions?
What is Prime Lending Rate?
Prime Lending Rate (PLR) is the reference interest rate based on which a Lender lends to its credit worthy borrowers.
Reliance Home Finance (RHF) offers Floating rate of interest linked to PLR (as on the date of loan sanction) of RHF. Presently PLR of RHF is 18%. Further, the rate of interest also depends upon the product sub-product variant.
|Salaried ||Self Employed |
|8.40% - 14.00% ||8.60% - 14.00% |
Please note: The range of Rate of interest mentioned above is as on date and is subject to changes basis change in RHF Benchmark PLR and/or the Pricing policy of the company.
What is MCLR & how does it affect your home loan?
Marginal cost-based lending rate (MCLR), this is the new benchmark lending rate and it replaces the base rate for new borrowers. Before 31st March 2016, banks used the base rate as the benchmark rate to lend.
Here is how an MCLR consists of 4 elements –
The Reserve Bank of India (RBI) regulates the banks to set at least 5 MCLR rates—overnight, 1 month, 3 months, 6 months and 1 year. Banks are allowed to set rates for longer durations as well. Not all loans will be calculated as per the MCLR. Loans covered by government schemes where banks have adhere to the interest rates as per the scheme, are exempted to be linked with the MCLR to determine their interest rates.
What is a Floating Rate of interest?
Also known as variable or adjustable rate of interest, a floating rate of interest as suggested by the name, implies that the rate of interest varies based on the market conditions.
- Benefit of floating rate of interest – This type of interest’s cost is lesser when compared to the fixed rate of interest. In a fixed rate of interest, no matter what is the market condition, the rate remains the same, so the borrower ends up paying a higher rate of interest sometimes. Even if the floating rate goes over the fixed rate, it will affect the borrower for a short period of the loan and not the entire tenure. The interest rates will surely fall over a long period and, thus, the floating interest rate brings a lot of savings.
- Drawbacks of the floating interest rate - The uneven nature of monthly installments can adversely affect the budget plan of the borrower. It may be difficult to budget with floating interest rate home loans. The borrower wouldn’t be able to gauge his exact expense from the EMI that will be payable to the lender, which gives him an ambiguity of what will be chargeable at the end of every installment. To know your eligibility of a home loan, please check out our Home Loan Eligibility Calculator to get a fair idea of your principal amount and further work out your EMIs.
What is a Fixed Rate of interest?
- A fixed rate is defined as the lending rate charged to borrowers that stays fixed irrespective of the changes in the MCLR. Home loans offered at fixed rate of interest ensure that the borrower has to pay fixed equal installments.
- Benefits of a Fixed Rate of interest – Market fluctuations do not affect fixed rate home loans, i.e., the interest rate remains the same no matter what the market conditions are.
- A fixed-rate of home loan helps the borrower in long-term planning & budgeting by enabling a fixed monthly repayment schedule.
- It assures the borrower about his financial security since customers need not expect any fluctuations in his repayment structure.
- Drawbacks – A borrower can’t benefit from the marketing conditions favoring the home loan interest rates, for e.g. if the marketed interest rates on home loans has dropped to 8.35% (current scenario), and the borrower has opted for a rate of interest of 9% in his sanction letter, he won’t be able to benefit out of this.
What is a Base Rate of interest?
A base interest is a benchmark set by the RBI, in which banks or lending institutions are not permitted to issue a rate of interest below the base rate. The importance of base rate is to keep the home loan process more standardized & to avoid any marketing instability. This helps borrowers to plan their home loan better and provides a sufficient to cover credit risk premium.