Loan Against Property

 

Our Loans Against Property can help you through life’s biggest moments. Weddings, personal passions, educational fees or career changes - we’ve got you covered. Refinance any existing commercial or residential property at the best rates today.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Udyog Loan Against Property

 

Are you an MSME owner looking to scale your business operations? Take your business to new heights with Godrej Capital Udyog Loan Against Property. Our loan solutions enable business owners to get higher loan eligibility by allowing multiple sources of income to be considered. With quick loan approvals and attractive interest rates, our goal is to help your business achieve growth.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Lease Rental Discounting

 

Want to leverage your rental earnings to get a loan? We offer industry-best loan-to-value Lease Rental Discounting, allowing you to explore new business opportunities, fund personal expenses, or even pursue higher education. Unlock the value of your assets without selling them.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Commercial Property Loan

 

Take your business to the next level with a Commercial Property Loan that finances construction, extension or improvement to make your business goals become reality. With plans designed for your life, you can rest assured that your business empire is in safe hands.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Balance Transfer

 

Transfer your existing loans to Godrej Capital and experience the benefits of lower interest rates, flexible repayment terms, and significant EMI savings. Enjoy higher eligibility, along with a Top-Up loan, to take care of your extra needs.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Home Loan

 

Seeking a Home Loan to buy a ready-to-move-in property, an under-construction house, or renovate your current residence? Our Home Loan, featuring low interest rates and flexible EMI plans, is specifically designed to help you accomplish buying your dream home.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Plot Loan

 

Found the perfect spot to build your future? Our Plot Loans can help make it yours. Our loans offer you the financial help, low interest rates and flexible payment options you need to construct the home of your dreams.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Professional Loan for Doctors

 

Whether you need working capital to start your own clinic or upgrade your current practice with new facilities and hire skilled staff, our professional loans for doctors are here to help you.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Professional Loan for Doctors

 

Whether you need working capital to start your own clinic or upgrade your current practice with new facilities and hire skilled staff, our professional loans for doctors are here to help you.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Professional Loan for CAs

 

Want to scale your professional practice? We now offer professional loans for doctors and chartered accountants (CAs) to help you expand your existing set-up, hire more staff, buy modern equipment, and fulfil other business requirements to improve and develop your services.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Business Loan for MSMEs

 

If you're an entrepreneur with a small business or an MSME and are aspiring to take your venture to greater heights, you're in the right space! While you hustle for your company's success, we stand prepared to accompany you on this journey. Access unparalleled funding possibilities with our MSME-focused business loans, aligning seamlessly with your endeavors for business growth.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Business Loan for Women

 

Are you a woman entrepreneur with a vision for business growth? We are excited to fuel your ambitions with our women-centric business loans. Whether you're spearheading a small-scale business or a micro enterprise, our MSME-focused business loans are designed to meet your business needs.

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

Business Loan

 

We give you the courage to take that next step that your business needs. Godrej Capital Business Loans empower you with customizable financing solutions to grow your business to the next level!

 

Key Benefits | Interest Rates | Calculators | Documents Required | FAQs

banking-and-finance.jpg

Did You Know? There are 3 Types of Rates of Interest



While narrowing down on a financer, the home loan rate of interest is one of the key considerations for a fence-sitting homeowner. Most potential borrowers put considerable weightage on the rate of interest before selecting a financer. Well, the reason is not hard to understand since the rate of interest is directly associated with the monthly EMIs.

 

However, as a borrower, you must know about the types of Home Loan interest rates available. Each of them is different, and not every type is suitable for everyone. The three most common types of home loan rates of interest are - fixed, floating, and semi-fixed.

 

WHAT IS A FIXED HOME LOAN INTEREST RATE?

 

As the name suggests, in a fixed home loan interest rate, the rate of interest is fixed throughout the loan tenure. Once locked, the interest rate remains the same until the time you repay the loan. Irrespective of the market happenings, the rate of interest remains constant.

 

Pros of Fixed Home Loan Interest Rates

 

  • Immune to market events and decisions taken by RBI on crucial policy rates, such as repo rate. The rate of interest remains the same until you repay the loan, and that is one of the biggest advantages of a fixed home loan interest rate.

     

  • Helps plan cash outflow and budget since you know much EMI you need to pay each month. Once you have factored in the EMI, you can direct money towards addressing other expenses, providing stability in overall finances, especially installment payments

     

  • Ensures financial security for borrowers since they need not expect any future risks as the interest rates remain the same.

 

Cons of Fixed Home Loan Interest Rates

 

  • Is expensive, and stability and predictability in EMI provided by fixed home loan interest rates come at a cost. These interest rates are a little higher than floating, making them costlier.

     

  • No benefit from the fall in rates. In other words, the lender will not be able to pass the benefits of reduced rates to you. Your EMIs wouldn’t change despite a fall in rates.

     

  • Prepayment penalty. If you wish to pre-pay a loan, availed on a fixed interest rate, you may need to pay a penalty. However, the amount varies across lenders and depends on the terms and conditions of the loan.

     

Ideal situation to opt for a home loan on a fixed interest rate

 

If you don’t want your EMIs to be unpredictable, it makes sense to opt for a home loan at fixed interest rates. Also, if there are chances of rates going up, you can avail of a home loan at a fixed rate of interest.

 

WHAT IS A FLOATING HOME LOAN INTEREST RATE?

 

Floating interest rate, unlike fixed rates, keeps changing as per the prevailing market conditions. It can go up or down depending on the situation. Floating interest rate is made of two parts – benchmark rate or index and spread. The benchmark rate is the measure of interest rate, while the spread is the extra amount lenders add to cover credit risk, profit mark-up., etc.

 

The spread amount differs across lenders. However, it remains constant throughout the loan tenure. On the other hand, if index rates move up, you need to pay a higher EMI and vice-versa.

 

    Pros of Floating Home Loan Interest Rates

     

  • Cost-effective in the long run since it is linked to the repo rate (the rate at which financial institutions borrow from the RBI). When repo rates go high, as they have now with the RBI increasing it by 40bps to 4.40%, floating rates would go up and vice versa. Note that while banks need to choose a benchmark rate such as the Repo rate for deciding Home Loan interest rates, housing finance companies (HFCs) and non- banking finance companies (NBFCs) can determine their own rates.

     

  • No pre-payment penalty as the RBI has banned penalties on home loans availed on floating interest rates. It means if you want to close the loan before its tenure by making pre-payments, no penalties will be levied.

     

    Cons of Floating Home Loan Interest Rate

     

  • Is unpredictable since factors affecting markets are beyond control and depend on domestic and international forces. The culmination of all these makes floating rates a little erratic.

     

  • Makes it difficult to plan finances as the EMIs could potentially change in case key policy rates change.

     

  • Following RBI’s hike in repo rates, several lending institutions have revised their home loan rates and have sent communication regarding new rates of interest to customers.

     

“I received a mail intimating me about the hike in EMIs of my loan from my lender. The rate of interest has been hiked from 6.75% earlier to 7.15% on my INR 30 lakh loan for a tenure of 20 years. It has made the EMI dearer by INR 719. I now need to save more,” says Arup Choudhury, a working professional in Kolkata.

 

Ideal situation to opt for a home loan on a floating interest rate

 

Ideally, you should opt for a home loan on floating interest rates when your income flow is adequate, and you are prepared mentally for a change in EMIs midway. If you are comfortable during periods of unpredictability, you can go ahead and opt for a home loan on a floating rate of interest.

 

WHAT IS A SEMI-FIXED HOME LOAN INTEREST RATE?

 

A semi-fixed home loan interest rate combines fixed and floating rates. Here, the home loan rate of interest is fixed for a specific period, after which, it’s converted into a floating one. It means in the initial years, the rate of interest is fixed. After some years, it automatically converts into a floating rate of interest.

     

    Pros of Semi-fixed Home Loan Interest Rates

     

  • Gives you the best of both as a borrower can avail the advantages of fixed and floating interest rates.

     

  • Flexibility on offer gives you time to prepare finances to align the EMIs as per the floating basis. Once the EMIs convert into the floating regime, you are better prepared to handle unpredictability.

     

    Cons of Semi-fixed Home Loan Interest Rates

     

  • Can make switching from fixed to floating difficult, especially once you get accustomed to the fixed obligations. If not prepared well, things can quickly go out of hands.

     

  • Your EMIs can significantly jump if there’s a rise in interest rates during the fixed period. As you enter the floating regime, the same will push up your EMIs by several notches.

     

Ideal situation to opt for a home loan semi-fixed rate

 

If there are chances of rates going high and then coming down, it makes sense to opt for a home loan under semi-fixed rates. If you have a medium-term home loan tenure, it’s wise to go for semi-fixed rates.

 

The table below captures the key differences between these three rates on different parameters:

 

Parameters Fixed Interest Rate Floating Interest Rate Semi-fixed Interest Rate
Nature Interest rate remains fixed throughout the loan tenure Interest rate fluctuates as per prevailing conditions Interest rates remain fixed for some years post which they change into floating rates
Ideal For Short to medium term tenure loans Long tenure loans Medium-tenure loans
Prepayment penalty Yes No Talk to your lender to know more.

 

Conclusion

 

Now that you know the various types of home loan interest rates, opt for the one basis your income and risk tolerance. As rate of interest profoundly influences EMIs and plays a crucial role in effectively First, let’s understand the managing the Home Loan opt for the one that doesn’t pinch your pocket hard.

 

Godrej Capital is the financial services arm of Godrej Group which offers Home loans Loan Against Property and other secured loans. With innovative products and offerings, customers can get hassle-free loans on easy terms and conditions. Click here to know more about he offering..

 

Disclaimer: The name(s) used in this article are fictitious and are used for representational purposes only.

 

The above information is for illustrative purpose only. For more details, please refer to the product or service document and/or connect with our customer representative prior to making any financial decision.