Choosing the right property loan

Choosing the right property loan is one of the first steps in the home buying process. You must select a home loan that offers competitive mortgage loan rates, low operational costs, and flexibility to prepay. 

Let’s look at three factors to consider for choosing the best mortgage loan. 

• Fixed vs. Floating Mortgage Loan Rates

Mortgage loan rates are of two types: fixed (that stay the same throughout the loan tenure) and floating (that changes throughout the tenure as per market conditions). Even though floating rates may seem tempting, fixed interest rates have proven to be more advantageous. 

• External Benchmarks

The benchmark rate is the lowest interest rate at which a lender can provide a loan to a consumer. The benchmark rate aligns with the repo rate set by the RBI. It’s wise to choose a lender that has linked its loan rates to the repo rate. This way, you can stay assured you’ll receive the best mortgage loan rates. 

• Loan Tenure

Selecting a suitable loan tenure is as crucial as choosing an ideal lender. Longer loan tenure is a better pick because you can get a higher loan amount and a low interest. Moreover, your cash inflow will increase as years pass by, enabling you to prepay your loan and reduce the interest outgo.

Wrap Up

Choosing the right property mortgage loan is an essential aspect of buying a home. When searching for lenders, look beyond the interest rate and evaluate other operational costs and quality of service to make the best selection. 

Additional Read: Fixed vs Adjustable Mortgage Loan Rates: How to choose the right for your need?