Amid this year’s festive season, Bajaj Housing Finance Limited (BHFL), a wholly-owned subsidiary of Bajaj Finance Limited has announced a reduction in its Home Loan acquisition rates for new customers. The new home loan acquisition rates start at 6.90%*. 

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Bajaj Housing Finance Limited says, "This rate cut will make home loan financing more cost-effective, as the housing loan interest rate is among the main loan components that decide one’s monthly and total interest outgo. Bajaj Housing Finance Limited offers high-value Home Loan funding, and with the latest home loan acquisition rate reduction, customers can work towards making their dream house a reality soon.:  

Here are some ways in which the drop in the home loan acquisition rate can be of benefit:-

Service smaller EMIs and pay less home loan interest

With acquisition rates starting at 6.90%* and onwards, the new housing interest rates promise budget-friendly EMIs. Considering the way in which home loan EMIs are calculated, customers will find that the housing loan interest rate impacts the EMI, and the net interest outgo, directly.

So, any change made to the current home loan interest rate affects the cost of the loan. To know the EMI and total interest outgo customers can use a home loan interest calculator. Below is a table illustrating EMI and net interest calculations, and from it one can see how marginal changes to the home loan interest rate have large long-term consequences.

Pick the loan amount and tenor more conveniently

With the home loan acquisition rates today being lower, customers can consider a larger loan amount for a more premium property, as the rate cut could offset the increase in interest caused by the principal. Similarly, the reduction in the home loan acquisition rate is sure to help service the home loan over a shorter tenor. This way customers can minimise their debt outgo. 

With low-interest home loans, customers can also afford to tweak the principal and tenor to arrive at an EMI structure that favours their debt-to-income ratio. For planning, customers can use the housing loan interest calculator.

Make prepayments to save more on total interest

With a new home loan or a floating rate home loan, customers benefit greatly when the interest rate drops. In fact, with less EMI outgo, customers may find themselves with surplus money, which they can funnel towards, say, an annual part-prepayment. The advantage of clearing a portion of the principal early is that each part-prepayment has a ripple effect, the result of which is huge interest savings in the long run. Moreover, there are no prepayment charges on floating interest rate home loans.

Take a top-up loan or carry out a balance transfer

Bajaj Housing Finance Limited also extends Top-up Loans at rates marginally higher than the present home loan interest rates. So, customers can avail this loan over and above their home loan for personal or business purposes and repay their dues on cost-effective terms. 

Likewise, if customers are with a different lender and looking to lower their outgo with the new home loan interest rates, can consider a home loan balance transfer after conducting a cost-benefit analysis. 

Finally, remember that as a home loan borrower, one can reduce their tax liability by claiming an annual home loan interest tax benefit. 

To get the minimum home loan interest rate, one must keep their CIBIL score high and their debt-to-income ratio low.