Every individual nurtures at least one dream regarding owning a home. But in reality, the house loan decision comes with so much confusion within it. With literally hundreds of options out there, you’ve got to be well acquainted to make the right decision concerning your own lifestyle and financial goals. The below guide will assist any first time home buyer in knowing how to select the right home loan.
Assess Your Financial Situation
The next step is to assess your finances:
- Credit Score: It determines how lower interest rates can be availed.
- Savings: Must be available for the down payment and all the extra costs, like that of registration and furnishings.
- Income Stability: Lenders are interested in providing the right borrowers whose income they can rely on.
Know the Loan Types
There are various types of home loans for different needs. Some common options in the market are
- Fixed Rate Loans: The interest rates remain fixed for the period of the loan; hence, you will easily assume the estimated amount of payment you will be making each month.
- Floating Rate Loans: The interest rates change with the market condition; at times it comes at lower rates.
- Home loans-subsidized by the government: one such example is the Pradhan Mantri Awas Yojana, which offers financial assistance to first-time applicants in India. A minor adjustment in interest rates can bring about huge repercussions related to the absolute cost of your home loan.
You should compare rates by using an online tool or by visiting the lenders.
Check whether the rate is:
- Annual Percentage Rate (APR): This comprises interest and other fees, better indicating total cost.
- Teaser Rates: These have a very low opening rate but later go up.
| Bank/NBFC | R.O.I (Reducing Per Annum) | Processing Fees | Loan Amount | CIBIL Score |
| HDFC Bank Home Loans | 8.45% – 10% | 0.5% – 1% | ₹5 Lacs – No Limit | 650 |
| Kotak Bank Home Loan | 8.75% – 10% | N/A | ₹20 Lacs – No Limit | 700 |
| Bank of India Home Loan | 8.5% – 10.75% | 0.25% – ₹10,000 | ₹10 Lacs – No Limit | 675 |
| Canara Bank Home Loan | 9.25% – 13.8% | N/A | ₹10 Lacs – No Limit | 675 |
| Aavas Housing Home Loan | 9.9% – 18% | 1% – 1.5% | ₹25 Lacs – ₹5 Cr | 650 |
| Bajaj Housing Finance | 8.45% – 10% | 0.2% – 0.5% | ₹5 Lacs – ₹75 Cr | 650 |
| PNB Housing Home Loan | 8.75% – 14% | 0.25% – ₹10,000 | ₹5 Lacs – ₹20 Cr | 625 |
| Shri Ram Housing Finance | 11.5% – 13% | 1% – 1.25% | ₹10 Lacs – ₹1 Cr | 650 |
| We Rize Home Loan | 10% – 18% | 0.5% – 1% | ₹5 Lacs – ₹75 Lacs | 650 |
| Mahindra Finance Home Loan | 9% – 15% | 1% – 3% | ₹3 Lacs – ₹75 Lacs | 650 |
| Capri Global Home Loan | 9.5% – 15% | 1.25% – 1.5% | ₹10 Lacs – ₹1.5 Cr | 650 |
| Tata Capital Home Loan | 8.6% – 11% | 0.2% – 0.5% | ₹30 Lacs – ₹7 Cr | 750 |
| Aditya Birla Home Loan | 8.9% – 11% | 0.5% – 1% | ₹25 Lacs – ₹25 Cr | 675 |
| Piramal Finance Home Loan | 10.5% – 14% | 1% – 1.5% | ₹30 Lacs – ₹5 Cr | 650 |
| Satin Housing Home Loan | 11% – 18% | 2.5% – 3% | ₹5 Lacs – ₹1 Cr | 700 |
| Indiabulls Home Loan | 9.4% – 10% | 0.5% – 1% | ₹20 Lacs – ₹5 Cr | 675 |
| Federal Bank Home Loan | 8.5% – 10% | 0.5% – ₹13,000 | ₹50 Lacs – ₹20 Cr | 675 |
| IDFC Bank Home Loan | 8.85% – 9.25% | 1% – 1.5% | ₹10 Lacs – ₹5 Cr | 680 |
| ICICI Bank Home Loan | 8.6% – 10% | 0.25% – 0.5% | ₹50 Lacs – No Limit | 700 |
| Axis Bank (Asha Home Loan) | 9.9% – 14% | 0.5% – 1% | ₹5 Lacs – ₹1 Cr | 700 |
| Yes Bank Home Loan | 9.4% – 10.5% | 0.25% – 1% | ₹50 Lacs – ₹10 Cr | 700 |
| Standard Chartered Home Loan | 8.5% – 10% | 0.5% – 1% | ₹25 Lacs – ₹25 Cr | 700 |
| SBI Bank Home Loan | 8.5% – 10.4% | N/A | ₹10 Lacs – No Limit | 650 |
| Union Bank of India Home Loan | 8.5% – 10.8% | N/A | ₹10 Lacs – No Limit | 675 |
| Axis Finance Home Loan | 9.5% – 11% | 0.5% – 1% | ₹30 Lacs – ₹10 Cr | 650 |
- Check the Loan Tenure
The loan tenure directly impacts your EMI:
- Shorter Tenure: Higher EMIs but lower overall interest.
- Longer Tenure: Lower EMIs but higher total interest paid.
- Choose a tenure that balances affordability and long-term costs.
- Calculate Your EMI
Monthly repayment can be predicted using EMI calculators, in which the overall loan amount combined with the percentage of interest and applicable tenure could help you to gauge estimated payments.
- Explore Prepayment Options
Check if your lender allows prepayment or part-payment without heavy penalties. Prepayment helps reduce the principal amount and interest burden over time.
- Understand Fees and Charges
Apart from the interest rate, consider other costs such as:
Processing Fees
Legal and Valuation Charges
Prepayment or Foreclosure Penalties
- Choose the Right Lender
Not all lenders offer the same benefits. Compare options from banks, housing finance companies, and digital lenders. Look for:
Transparent terms and conditions
Customer service reviews
Flexibility in loan terms
- Check Eligibility for Government Schemes
First-time homebuyers can benefit from subsidies under schemes like:
PMAY: Interest subsidies are offered according to the income category of families.
Affordable Housing Schemes: State schemes for the lower and middle-income households.
- Get Pre-Approved
Pre-approval is a primer for the home-buying process, as it.
Indicates an understanding of the loan eligibility
Helps seal with the seller that you speak the serious business
Speeds up the process of disbursing funds when the property is finalized.
- Consult an Expert
If in doubt, consult a financial advisor/home loan expert who will guide you better regarding the option to be selected based on his/her financial profile and future goals.
Conclusion
The first-time buyer needs to be strategic and research extensively with respect to the right home loan. Mapping your needs, comparing the alternatives, and knowing the schemes available can help you attain a loan that fits the budget towards actualizing your goal for homeownership. Start exploring your home loan options today!