5 Questions to Answer before Applying for HDFC Home Loan

With decadal low interest rates, besides the ongoing discounts and correction in property prices, it is the perfect time to buy your dream home. Whether you are a salaried individual, a professional or a business owner you can lock in the best rate of interest with your chosen lender such as HDFC Ltd.

As we know, most banks and financial institutions are offering attractive offers on online loan applications. Thus, if you want to Apply for HDFC Home Loan Online, you can certainly tap great concession on interest rate as well as processing charge. The benefits are not limited to first-time home buyers, the similar lines of benefits are offered to customers looking out for balance transfer of their existing Home Loans.

So, whether you have just begun the scouting of your dream home or have already finalised one, here are 5 questions you must answer to avail of the best Home Loan offer from your favourite lender HDFC.

  1. Is effective Home Loan Rate is as attractive as advertised rate?

In your search for the Best Home Loan Deal, you would come across multiple lenders offering lower than 7% interest rate. For instance HDFC Home Loans are being offered at 6.95% p.a. with 5bps concession for women borrowers. However, the effective rate may be around 7.25% p.a.

Note that effective Home Loan rate includes margin, premium, and spread along the rate of interest. These parameters vary as per the applicant’s loan amount (LTV ratio), credit score, and down payment besides income and Job/ work stability. Therefore, final Home Loan Interest Rates will vary drastically as per the profile of the borrower.

In order to seal an attractive HDFC Home Loan Interest Rate, ensure that you opt for up to 80% loan amount of the property, possess good credit score of 700+ and have all the documents to prove the job and income stability. The better is your past credit repayment history, lesser would be risk premium and spread charged on the loan offer.

  1. Why opt for HDFC Ltd Home Loan?

There are plethora of Home Loan options from leading banks and Housing Finance Companies (HFCs). As discussed above, many leading lenders are offering rate concessions and processing fee waivers currently to attract the customers. It is thus important that you make an informed decision and make the best of the available benefits.

Answer, why should I opt for HDFC Home Loan first! Make a list of benefits and reasons for your choice of lender. Some of the relevant factors could include: reducing balance method of calculation for interest, affordable EMI & conducive loan term, flexible repayment modes such as step up, step down or combination home loans, customised deals with offers such as OD, credit card etc. Know your reasons to make a confident decision.

     3. What mode of interest rate/ EMI you want to opt for?

Since October 2019, lenders are offering loans linked with external benchmark rate. The lending rates change as per the change in external benchmark rates such as repo rate, or 91-day Treasury-bill yield, 182-day T-bill yield etc. This is why, we have seen sharp fall in lending rates owing to fall in interest rate since last year.

However, do not overlook the fact that one cannot predict the market movements and the trend can reverse with the same momentum in future as well. Those who want to opt for fixed rate home loans do not have many choices available as maximum banks are offering variable rate loans presently. With HDFC you can apply for 2 year fixed loan variant wherein the rate regime converts to variable after fixed two years. That is, the rate you lock today will be fixed for next 24 months. In current situation, it is recommended to lock the rate as there is little speculation for further rate cuts now.

  1. How long do you want to take for repayment of Home Loan?

Though the Home Loans are available for extended loan period of 20-30 years, it is recommended to repay the loan as early as possible for you. For, repaying early saves interest cost and also improves your credit profile. Further, with Home Loans there are NIL charges on foreclosure or prepayment. However, lenders do apply some capping on the part prepayment of loans.

According to your repayment plan, read the pre-payment clause and make the decision. You can pre-pay in multiple ways: 1. Paying more than EMI each month. 2. Making lump sum annual payments. 3. Bullet payment at the end of loan.

  1. How much you want to pay as down-payment?

HDFC offers Home Loans for 75-90% market value of the residential property. The source of down payment is another criteria to judge the loan eligibility. So making a larger down payment from your bank account, displays your financial strength. Always calculate the down payment and discuss the eligibility for loan sanction amount before starting the application. This will help you get transparent picture about interest rate.

All in all, after finding answers to these 5 questions you can certainly make an informed decision and tap the best offer from your chosen lender. Use professional service, in case you have doubt and compare with other lenders.

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