Home Loan Interest Rates - March 2024

Step 2: Verification and Processing 

Upon submission of the required form and documents, the bank initiates the processing of your Home Loan application, meticulously examining your credit score. Hence, maintaining a positive credit history is crucial. It is imperative to provide accurate information during the application process, as any inaccuracies could result in the rejection of your loan application.

Step 3: Loan Sanction

The bank will verify all documents submitted during the application process before proceeding further. Typically, if the paperwork is deemed accurate, verification can take 1-2 days, sometimes even less.

In specific cases, the bank may require the applicant to attend an in-person verification before approving the loan. This step is undertaken to gather additional information about the application and to confirm the applicant's ability to repay the loan along with interest.

Step 4: Technical and Legal Check

Before releasing the loan funds, the bank conducts both legal and technical assessments. Representatives from the bank will verify the property for which you've applied for a loan. If the property is still under construction, they will inspect the progress and quality of the work.

During the technical assessment, bank representatives will evaluate the actual value of the property, taking into account its status (whether under construction or up for sale).

For resale properties, the bank will consider factors such as the property's age and maintenance. Additionally, they may investigate whether the property has been mortgaged previously. Ownership rights will also be scrutinized to ensure there are no discrepancies in the provided documents.

Step 5: Payment of Home Loan Processing Fee

After successfully verifying the paperwork and legal check, the applicant will have to pay the home loan processing fee to the bank. This processing fee is collected to maintain the loan account of the applicant. 

Usually, the processing fee for a home loan ranges from 0.25 % to 0.50 % of the loan amount.

For example, suppose you have applied for a home loan of Rs. 15 lahks, then you will have to pay a processing fee of Rs. 3,750 (at 0.25%) and Rs. 7,500 (at 0.50%), respectively.

Step 6: Disbursal of Loan Amount

Upon satisfying all eligibility criteria, you will reach the concluding stage of the home loan application process. Subsequently, you will receive a formal agreement letter, and upon its receipt, the loan amount will be disbursed into your bank account. Additionally, a comprehensive home loan EMI schedule will be sent to your registered email address.

There are two major methods for the calculation of the housing loan interest rate, and they are:

a) Home Loan Interest Rate Formula for All Bank Calculations

This is a manual form of calculation, and the below-mentioned formula is used:

[P x r x (1+r)^n]/[(1+r)^n-1]

Here, p = Principal, R = Rate, and n = term.

b) EMI Calculator for the Current Home Loan Interest Rate Calculations

This is an online EMI calculator that is used to calculate the interest rate, monthly EMI, and total payable amount. You can find an EMI calculator option on your Bank's online website. You will have to enter these details to calculate your monthly EMI:

• Rate of Housing Loan Interest Rate
• Total Loan Amount
• Total Tenure for Loan Repayment

The following are the factors that determine your home loan eligibility and the final housing loan interest rates that will be offered:

• Employment and Income: Your home loan eligibility hinges on factors such as your salary, employment type, and the profile of your employer, all of which lenders take into account. Thus, it's crucial to furnish accurate employment information to ensure successful verification.
• Interest Rate Type: The interest rate you select for your home loan plays a significant role in determining the pace at which you can repay your lender. With fixed-rate home loans, EMIs remain consistent throughout the loan duration. Conversely, floating rates vary in response to fluctuations in lending rates, such as the Repo Linked Lending Rate (RLLR). Lenders typically impose higher interest rates on fixed-rate home loans due to the increased interest rate risk associated with them.
• Loan Amount: The desired loan amount can also impact the interest rate applicable to your home loan. Typically, home loans up to Rs. 30 lakhs tend to attract lower interest rates compared to larger loan amounts.
• Credit Score: Your credit score, also known as the CIBIL score, reflects your credit history. Timely payment of EMIs contributes to maintaining a favorable credit score. A credit score of 750 or above increases the likelihood of securing a housing loan. Numerous banks and HFCs provide home loans at lower interest rates to individuals with superior credit scores.

You must check all the eligibility conditions before applying for a housing loan. You should go through the current home loan interest rates of all the banks and decide accordingly. You can also visit any bank branch in your city and seek professional assistance to get the options and offers available.