Housing loan interest rates that are offered directly determined your home loan EMI amounts based on the credit amount and chosen tenor. Some of the determining factors of home loan interest rates are as follows –
  1. MCLR
MCLR (Marginal Cost Based Lending Rate) is the minimum benchmark rate at which lenders sanction advances to borrowers. The MCLR is calculated based on the marginal cost of funds, cash reserve ratio, and the operating cost of a lender.
  1. Repo Rate
This is the rate at which the Reserve Bank of India lends to financial institutions. Repo rate is used by the RBI to control inflation. When the RBI lowers or increases the repo rate – this affects the interest rate on financial products like a home loan.
  1. Credit Score
Your CIBIL score plays a pivotal role in determining not only your housing loan amount but also the latest home loan rates and other terms as well. If you possess your high credit score around or above 750, it reflects your creditworthiness and capacity to repay the loan amount on time. It can also help you secure a considerable housing loan on a nominal rate of interest.

  1. Home Loan Tenure
The longer is your home loan tenure the lower the EMIs. Thus, you can opt for a housing loan with shorter tenor to lower your overall interest outgo. However, note that longer tenors mean a higher overall interest outflow over the whole tenure.
Now that you know the determining factors use a housing loan EMI calculator to estimate your EMIs beforehand to plan your finances efficiently.