Changes in Mortgage Rates and How They Affect You

Kishan Thakkar K

Introduction

Mortgage rate is the rate of interest charged on a mortgage. Fixed-rate mortgage and adjustable-rate mortgages (ARMs) are two primary types of mortgage. The rates are decided by the lender and it can either be staying the same for the term, or fluctuating with a benchmark interest rate.

The loan for home buying is primarily a long-term process and consideration for homebuyers looking to finance a home purchase. The taxes and insurance vary as per the location of the homes. The eligible applicant for mortgage loan can avail the mortgage loans by keeping an owned property as collateral to the bank or the lenders. Lenders generally offers the generally property loan interest rate between 10.10% to 11.0% for salaried borrowers and 10.50% to 14.50% for self-employed borrowers.

The LTV (Loan to value) offered by lenders depends on the various factors, the LTC can range between 70% to 80% of the property’s market value. A borrower can avail up to Rs. 3.5 crores as a mortgage loan with the repayment tenure up to 20 years.

Types of Fees on Property Loan

Loan Against Property processing fees – Up to 1.5%

Property Loan statement charges – Rs. 50

LAP Interest and principal statement charges – NIL

Mortgage EMI bounce charges – Up to Rs. 3000/-

Penal Interest – Up to 2% per month + applicable taxes

Mortgage origination fees – Up to Rs. 4999

property type and location, Credit score, Size of loan, loan tenure are some of the factors that affects the mortgage loan Interest.

Mortgage loan EMI Calculator

A mortgage loan EMI Calculator allows home buyers to assess their repayment capacity via quick EMI (Equated Monthly Instalments) computation.

You need to know few essential details to assess the EMI amount, like – 

1. The amount of loan you need to avail

2. The mortgage loan interest rate

3. An appropriate tenure for loan repayment

Based on these, the EMI calculator calculates the fixed monthly liability that borrowers need to pay. The calculator works on the simple formula as below

The EMI calculator is tool that help the individual to assess. You can assess you EMI suitability by below two parameters,

1. Decide the loan amount. This affects the EMI value proportionately

2. Decide the tenure value. This affects in an inversely proportional instalment value.

The mortgage loan EMI calculator also helps the individual to compare the various mortgage rates that is offered by various institutions.

Some of the financial institutions and their mortgage loan interest loans for salaried individuals are listed below,

BanksMortgage loans interest
Kotak Mahindra Bank6.50% – 7.10%
Bank of Baroda 6.50% – 7.85%
IDFC First Bank 6.50% – 8.00%
ICICI Bank 6.70% – 7.40%
Punjab & Sind Bank 6.70% – 7.60%
IDBI Bank6.75% – 8.40%
SBI Term Loan6.75% – 7.15%
Union Bank of India6.80% – 7.35%
Indian Bank6.80% – 8.25%
Central Bank of India6.85% – 7.30%

Rising interest rates impacts on how much house people can afford. Buyers starts to modify their home-buying plans. 

Relevance of repo rates and mortgage rates

There are different industries that are interlinked with each-others such as Construction Industry, Finance, Real Estate, Manufacturing Industry, Oil & Gas, FMCG, etc.

On Micro level, Construction industry and real estate industry are dependent on each other. The finance industry gets involved on macro level. A huge amount of transactions gets involved in these industries that are managed by the finance sector. 

RBI lends money to the private and public bank, on the certain rate, which is called Repo rate. These banks further lend money to the consumers at the interest rates. Due to the globalization, the lending capacity and repo rate varies as per the global market scenarios. The RBI has kept the repo rate unchanged at 4%. The buyers will be able to take loans at affordable prices. The unchanged repo rate of RBI certainly helps the real estate sector to develop.

The public sector and private sectors bank have eased their home loan interest rates that are quite affordable. Anuj Puri, Chairman, ANAROCK Group told Goodreturns.in, “In short for home-buyers, the low home loan interest rates regime will continue in the market and help foster housing demand during the ongoing festive season. Notably, this is a period when housing sales usually surge on the back of attractive offers by developers and lending banks.”

As per the ANAROCK Research, it is expected 10-15% growth in housing demand in the Oct-Dec 2021 across the top seven cities of India. In third quarter of 2021, top seven cities witnessed the total housing sales of nearly 62,800 units. 

Do not let go of the opportunity to buy the house in these present times. If you are interested in buying a home, reach out to a trustworthy real estate agency is a great way to get experts views and advice. Don’t feel hesitant, approach the best around you! Roodland understands our need, expectations, and works with you to achieve them. Roodland ensures to be with you in every dream of yours and guides you with the best!

For any queries and suggestions, write to us at info@roodland.com and discuss all of your options with an experienced real estate professional. 

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