Buying a home is a big dream for many Indians. Most individuals take a home loan for this. When you apply for a home loan, one of the most important things is to choose a lender with a suitable interest rate. India Shelter Finance Corporation is a popular home loan provider in India. Before you choose a loan from them, it is important to understand what can affect your India Shelter home loan interest rate. 

Your Credit Score

Your credit score shows how well you have managed money and paid back loans in the past. A high credit score, usually above 750, means you are a responsible borrower. Lenders see you as a lower risk. Because of this, you may get a lower India Shelter home loan interest rate. If your score is low, lenders might charge a higher interest rate or even deny your loan application. Always try to keep your credit score strong by paying bills on time.

Type of Interest Rate

When you take a home loan, you usually pick one of two interest rate types: 

• Fixed Interest Rate: 

This rate stays the same throughout your loan period. Your EMI will not change. This gives you a clear idea of your monthly payment, making budgeting easy.

• Floating Interest Rate: 

This rate can change over time. It goes up or down based on market conditions and what the Reserve Bank of India decides. Floating rates often start lower than fixed rates. However, they can increase if the RBI raises its main lending rates. So, your EMI can go up or down. 

RBI’s Monetary Policy

The Reserve Bank of India sets what is called the ‘repo rate’. This is the rate at which banks borrow money from the RBI. When the repo rate is lowered, borrowing becomes more affordable for banks. 

This often leads to banks and housing finance companies, like India Shelter, lowering their home loan interest rates. If the RBI increases the repo rate, home loan rates usually go up. This is a big factor that can change your India Shelter home loan interest rate.

Loan Amount

The amount of money you want to borrow also matters. Lenders sometimes offer better rates for loans within a certain range. Very small or very large loan amounts might have slightly different rates. 

It is important to borrow only what you need and can comfortably repay. You can use an online calculator to calculate home loan EMI online for different loan amounts to see what fits your budget. 

Loan Tenure

Loan tenure is the period over which you pay back the loan. It can be from 5 years to 20 years or even longer.

• Shorter Tenure: 

If you pick a shorter loan period, your monthly EMI will be higher. But you pay less interest overall, as the loan is paid off faster. Lenders often see shorter tenures as less risky. 

• Longer Tenure: 

A longer tenure means a lower EMI, making monthly payments easier. However, you will pay more interest in total over the longer period.

When you calculate home loan EMI online, try different tenures to find a balance between affordable monthly payments and total interest paid. 

Your Job and Income Stability

Lenders want to know you can pay back the loan. If you have a stable job, especially with a good company or government body, lenders see you as a lower risk. This can help you get a better India Shelter home loan interest rate. 

If your income is not regular, or you are self-employed, lenders might charge a slightly higher rate to cover the higher risk. Showing proof of steady income is always helpful. 

Loan-to-Value (LTV) Ratio

The Loan-to-Value (LTV) ratio shows how much of the property’s value is considered for a loan. For example, if a property costs ₹50 Lakhs and you get a loan of ₹3.75 Lakhs, the LTV ratio is 75%.

• A higher LTV ratio means you are borrowing a larger part of the property’s value. This is riskier for the lender. So, they might charge a higher interest rate.
• If you pay a larger down payment, the LTV ratio becomes lower. This means you borrow less, which is less risky for the lender. You might then get a lower India Shelter home loan interest rate

Property Location and Type

The place where the property is located can also affect the interest rate. Properties in developed areas or cities often have lower interest rates. This is because these properties usually hold their value well and are easy to sell if needed. Properties in less developed or risky areas might get higher rates. The type of property (e.g., apartment, independent house, plot for construction) can also play a small role.

Conclusion

Getting a home loan is a significant financial decision. The interest rate plays a big part in how much you pay back over the years. By understanding these factors you can make your home-buying journey smoother. This can help you secure a lower India Shelter home loan interest rate. Remember to use tools to calculate your home loan EMI online and plan your finances better.