Summary of this article
HFCs and NBFCs offer festive home loan rates starting at 7.45 per cent, below banks
Borrowers should weigh long-term affordability over short-term Diwali discounts
Floating or hybrid loans offer flexibility to benefit from future rate cuts
Fee waivers, insurance bundles, and a clean credit history improve borrowing terms
This year, housing finance companies (HFCs) and non-banking finance companies (NBFCs) are offering festive rates opening at around 7.45 per cent, which undercuts multiple standard bank rates, ranging anywhere between eight per cent to nine per cent or even more. Meanwhile, lenders – banks, NBFCs, and fintechs in the last few Diwali seasons have offered discounts of 10-25 basis points to first-time homebuyers. So, for this particular cohort, this year, offers could imply lower equated monthly instalments (EMIs) – at least 0.10 to 0.50 per cent, translating into tangible savings.
This festive season, lenders are offering marginally lower interest rates, reduced or waived processing fees, and in some cases, bundled benefits such as discounts on insurance. “Compared to regular months, the difference is not always substantial in the rate itself, but the add-ons and fee waivers can make the overall cost of borrowing slightly lower. For a first-time buyer, these seasonal offers can provide a short-term advantage in reducing upfront costs,” says Pramod Kathuria, Founder & CEO, Easiloan.
Look At Home Loans With A Long-Term Perspective
Well, in most cases, festive season or Diwali discounts do look attractive, but mortgagors must look beyond the glitter. Over a two-decade tenure (20 years), even a 0.5 per cent difference in floating vs fixed rates can change total repayment savings by Rs 4 - Rs 6 lakh on a Rs 50 lakh loan.
Similarly, processing fees or bundled insurance, which is often 0.25 - one per cent of the loan value, can offset festive season savings. Look for long-term affordability, transparency, and flexibility in terms of rates over short-term deals. Diwali comes annually, but EMIs can last a lifetime!
The borrower must consider the cost of credit over the life of the loan rather than the cost during the festival period.
Stay Flexible To Gain From Rate Cycles
New homebuyers must favor flexibility. Selecting a floating rate loan with favorable reset terms can capitalize on any declining rate cycle, provided there are no punitive prepayment penalties and thus no loss of interest outgo in case of increased incomes.
“Hybrid loans, in which the rate remains fixed for some initial term and then reverts to floating, can be an option for the risk-averse, providing a balance between current stability and long-term gain,” says Kathuria. Further, developing a spotless credit history prior to making the loan request opens up the best terms irrespective of market action.
