It has certainly become a norm of the festive season – offers on a home loan, car loan, retail shopping – the list is long. How many of you have planned some big purchases already around Diwali month? A home loan is also a part of festive loan schemes by the bank to capture the happy mood of the market. One should use these offers to decrease the cost of borrowing. A penny saved is a penny earned! Most banks come up with various offers, such as a lower interest rate or zero processing fees etc., to name a few. So there is no harm in taking advantage of this season.
The prospect of owning a property and possibly a forever home is a significant step in strengthening your individuality. It’s a dream come true if you’re from the working class. Hence, such a sharp increase in property, especially residential properties, can be seen during the Diwali season. You must have seen some fantastic deals from builders too. Well, during the festive boom, almost everybody tries to capitalize.
Recently, RBI has also announced to rationalize the risk weights and link them to the loan-to-value ratio for the housing loans till March 21, 2022. This will lead banks to lend more money to home buyers, a major boost to real estate leading to more economic activity. Check out the likes of State Bank of India, HDFC Bank, ICICI Bank, etc. loan offers. However, do make a note that public sector banks still offer the cheapest home loan interest rate with or without the festive season.
We are sure that on a random internet search, you will be able to find a lot more information about such deals. The key issue, however, is whether or not you must consider such festive deals. It’s easy to get tempted by such a massive bombardment of offers. But just because the interest rate is low doesn’t mean you should get a home loan. Most of these schemes are ongoing but advertised as specials during the festivities. Also, if you look closely at these offers, you might notice that usually offers are on big amounts. Thus, small loan takers must double check before applying for any home loan.
So let’s try to understand a few key points, which should determine your decision for a home loan. They directly affect the cost of borrowing as it is a long term decision. While discussing your home loan terms & conditions, do ask about the following:
- Processing fees
- Charges for non-payment of EMI
- Any penal charges
- Other charges
Though if you decide to go ahead with your home loan, you will experience some clear advantages, good enough to complete that pending loan application.
Ease of Application – The main intent of such festive offers is to increase the number of loan applicants, so you experience less tedious formalities, especially if it is a top-tier bank. Just make sure that you meet their eligibility criteria and apply online. Yes, it becomes so easy!
Low-Interest Rate – The interest rate on both personal loan or EMI or credit card can go as high as 24%, but the interest on festive loan offers is much lower in comparison.
Low processing or No charge – Processing charge can touch 3%-4%, but with festive loans, expect to pay only 1% or even nothing at all.
No Penalty Clauses – Both personal loan and the credit card have prepayment charges and sometimes when you pay advance EMI under most festive loans, you won’t find such charges.
So should you opt for a festive home loan? Well, yes if it is a high-value property and almost finalized. Your choice of loan should factor in two conditions. First is the loan amount you intend to take, and second, the tenure of the loan.
Diwali, or for that matter any festival, is an auspicious time to buy your dream home and such festive loans are your savior. But don’t forget, a loan is a loan, and it has to be paid back. Apply for the home loan with a well-researched plan, your assessment of risk, and assets & liabilities like a smart investor.