Home Loan Provider

When we think about buying a house, the first thing that comes to mind is getting a home loan from a commercial bank. There are, however, other ways to pay for your home. These include loans from Housing Finance Companies (HFCs), Non-Banking Finance Companies (NBFCs), and mortgage loans.

Scheduled Commercial Banks (SCBs): In the housing finance market, Scheduled Commercial Banks (SCBs) have the biggest share of the housing loan portfolio. This may be because these banks have a lot of customers. The Reserve Bank of India (RBI) is in charge of SCBs. There are two types of SCBs: Public Sector Banks and Private Sector Banks. Most of the stake in a public sector bank is owned by the government, while most of the stake in a private sector bank is owned by private people.

Housing Finance Companies: HFCs are the second biggest players in the housing finance market. They are overseen by the National Housing Bank (NHB). Most of the time, HFCs charge more for loans than SCBs do. But these can add fees like stamp duty and registration costs to the loan amount, which commercial banks can’t do. So, most HFC customers are people who can’t make a big down payment and therefore need a bigger loan. HFCs are another option for people who can’t get a loan from a bank. Below are the home loan rates for some of the best HFCs in the country:

So, how does one decide between a home loan from a bank or a home finance company (HFC)? Well, it’s a common misunderstanding that people only go to an HFC for a loan when they’ve been turned down by a bank. In some cases, getting a loan from an HFC can be better. Before deciding between a bank and an HFC, you may want to think about the following:

• HFCs are best for people who want to borrow a larger amount of money and pay back less of it themselves.
• RBI rules say that SCBs can only lend up to 80% of what the property is worth. This means the borrower has to pay at least 20% of the property’s value on his own. When the stamp duty and registration fees are added to the amount, the borrower ends up having to pay a large sum of money.
• The National Housing Bank (NHB), which oversees HFCs, takes the cost of stamp duty and registration into account when figuring out how much a property will cost in total. In a country where these fees can be as high as 6–8 percent, this can make a huge difference.
• HFCs are also flexible when it comes to evaluating a business’s income, eligibility, and credit score.

On the other hand, if you get a home loan from a bank and keep doing business with them, it becomes easier to get other loans and products.

Floating vs. fixed interest rates

When applying for a home loan, one of the most important decisions is between a fixed and a flexible home loan rate. Let’s look at both of the choices.

Fixed interest rates

Fixed interest rates mean that the rate at which you pay back your home loan won’t change no matter what happens in the market. In the first few years of a home loan, most of the monthly payments go toward paying off the interest. In the later years, most of the payments go toward paying off the principal.

Floating interest rate

When interest is “floating,” it means that the rate changes based on how the market is doing. Floating interest rates on home loans have a base rate and a variable rate. So, if the base rate changes, so do the floating rate.

So, what to choose?

The choice between a fixed and a floating interest rate is up to each person. If you have been keeping up with what the financial market is saying, it might be easier for you to choose between the two. If you think that home loan rates will go down, you should choose a plan with a variable interest rate. But if budgeting and knowing exactly how much you will spend each month is important to you, you may want to choose fixed rates.

Disclaimer: The opinions shown above are mainly for informational reasons and are based on market research. Deal Acres is not responsible for any actions made as a result of relying on the provided material and makes no representations as to its accuracy, completeness, or reliability.