Home loans for flats, apartments, and home purchases
A home loan, also known as a mortgage, is a type of loan used to finance the purchase of a property such as a ready flat, an under-construction apartment, a land for the construction of home, and a range of other residential and commercial property. The property serves as collateral for the loan, which means that the lender can seize the property if the borrower fails to repay the loan. Home loans typically have a longer repayment term than other types of loans, ranging from 15 to 30 years, and often have a lower interest rate compared to other types of loans.
Borrowers can apply for a home loan through a bank, credit union, or other financial institution. The lender will evaluate the borrower’s creditworthiness and ability to repay the loan, taking into consideration factors such as income, employment history, and existing debt. After the loan is approved, the borrower makes monthly payments to the lender until the loan is fully repaid, including both principal and interest.
There are several types of home loans, including fixed-rate mortgages, adjustable-rate mortgages (ARMs), and government-backed loans. It’s important for borrowers to carefully consider the terms of their loan and choose the type that best suits their needs and financial situation.
The Bank provides funds to its customers through Retail Loans for their personal needs such as home purchases, home repair, automobile purchases, pursuing education, medical care, and other consumer uses.
What is a Repo rate?
The rate at which the RBI loans short-term funds to the other banks is known as the repo rate. The repo rate and the commercial banks’ lending rates are closely correlated. Due to the increase in the repo rate, banks will now be required to pay the RBI a higher interest rate, which would then be deducted from the banks’ retail and corporate borrowers. Higher interest would be paid on bank loans because of this. As a result, loans will cost 1-2% more.
RBI repo rate hike may impact home loans and retail loans
The Reserve Bank of India (RBI) increased the repo rate by 25 basis points in its first monetary policy move following the Union Budget 2023. It is indeed good news for the depositors as the banks will soon begin passing on the advantages to the consumers in the form of an increase in deposit rates. But home loan rates are anticipated to be impacted by the rise in the repo rate. Since house loan for flats, apartments and residential properties rates are typically benchmarked to the repo rate, they will also rise in response to an increase in the repo rate. This implies that house loans and other borrowings will become more expensive for as the cost of borrowing increases. It is the sixth straight hike since the RBI began raising rates in May 2022, leading to an increase in interest rates of 250 basis points.
According to RBI Governor Shaktikanta Das, four out of the six members of the Monetary Policy Committee (MPC) have opted to proceed with the repo rate increase. On February 6, the RBI opened a three-day meeting amid a rate-hiking frenzy that started in May of last year with the goal of controlling inflation.
If you are planning to buy flats, apartments or residential properties with the help of loans always choose for the best builders in town. With Dreamflower, our team of professionals helps you with the best advice for choosing your home. We provide you with a wide variety of luxurious and budget-friendly flats at Kadavanthra, Edapally, Palarivattom and many other places in Ernakulam.