Loans at lower interest rate

                                                                                         

Of late, the Reserve Bank of India has cut in its key rates. As such, in response to this initiative by the RBI, the State Bank of India had a reduction in both its lending and deposit rates. This initiative will really boost the real estate industry in India.

Perhaps, people who are desperate to purchase or construct a new house will definitely do it this time. Opportunity is knocking at your door and you just need to welcome it.

Mr. O.P. Bhatt, the chairman of SBI has just declared that the state owned bank decided to reduce its prime lending rate to a great extent i.e. by 75 basis points from November 10, 2008. But, the Banks like Punjab National Bank, Corporation Bank, Union Bank, Syndicate Bank and UCO Bank have already cut their lending rates. However, Banks like Indian Overseas Bank, Oriental Bank of Commerce are yet to cut off the lending rates.

The oriental Bank of Commerce has cut its lending rate on home loans up to Rs. 30 lacs. The Bank has also reduced its lending rate on education loan. Of course, this venture on the part of the banks are going to be very beneficial for the prospective borrowers of loan who have been since long cherishing the dream of purchasing real estate in India. The availability of the housing loans in the country is one of the main factors behind the boom in the real estate industry in India. This loan can be obtained not only for construction of new house but this loan can also be utilised to renovate or extend a house or even purchase real estate or pay the stamp duty. Besides the aforementioned banks there are other financing companies in the country like HDFC and ICICI who offer loans. These banks also offer home loan to enable people to realise their dream pertaining to real estate at decent rates. Whenever, you consider home loan one has to have good knowledge of the rate of interest that are being taken from the borrower in return for the loan lent. This rate of interest is classified into two types which are fixed and floating. There are different kinds of clients in the loan market. Some would like the fixed rate of interest whereas, there are others who would like to have the floating rate of interest. Both the rates do not have identical repayment structure. If you have adopted the fixed rate you will have the same stable rate of interest throughout the loan repayment period. However, a borrower must make it a point that he does not delay any instalment. Otherwise, the borrower may have to bear the penalty for delay. On the contrary, the floating rate is not stable or does not remain same during the repayment term. It does fluctuate and one has got to bear the rise in its rate. But, the floating rate is suitable for you only if you are able to pay of the loan quickly. This rate will also suit you if you are capable of making additional repayments.

Clients of housing loans must also be aware of the hidden charges, if there is any. At times, it is also found that there are a lot of restrictions associated with a loan when its rate of interest is low. An individual must make it a point not to delay any instalment as such an act on the part of the borrower may lead to penalty in the form of extra cost.

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