Decoding Home Loan Offers This Diwali

Lenders often capitalise on the festive spirit by providing special home loan offers to attract customers. Let us take a look at what you can expect.

Lower Interest Rates: “Lenders frequently give special Diwali discounts, ranging from 0.25 per cent to 0.5 per cent. Even a little rate drop can result in large equated monthly installments (EMI) savings over time,” says Rahul Banerjee, Managing Director (MD), PGP Academy.

No Processing Fees: Banks can waive or lower the customary 0.5 per cent to one per cent processing cost, which is a significant benefit when borrowing large quantities. For a Rs 50 lakh loan, this may mean saving up to Rs 50,000 upfront.

Special Tenures And Payment Structures: “You might see extended loan repayment periods, often up to 30 years, which could reduce the monthly EMI burden. Additionally, options like step-up loans (lower EMIs initially) may be available, helping buyers align payments with growing incomes,” says Banerjee.

Festive Contests And Offers: Many lenders promote Diwali with added benefits like cashback of up to Rs 1 lakh, shopping vouchers, or inclusion in prize draws, which can sweeten the deal further.

Waiver Of EMIs: A few lenders offer special offers on home loans which include waiver of the last 12 EMIs of the repayment tenure for those who maintain an impeccable repayment record.

Read The Fine Print

However, it is important to understand the terms and conditions of a loan before you go for it, because everything may not be as it seems.

“Look beyond festive discounts and carefully consider the true costs involved. Make sure the loan fits your financial capacity and repayment ability. Research carefully by comparing offers from different lenders and weigh the pros and cons before making the final decision,” says Atul Monga, CEO & co-founder, BASIC Home Loan.

Hence, it is important to have a clear idea of the costs, and one should not get carried away by the headline offer.

“While festive offers may provide short-term benefits, take the time to evaluate the total repayment amount over the entire loan tenure, as longer terms can result in higher interest costs,” says Vikram Singh, executive director, Urban Money, a tech-enabled loan platform.

One also needs to remember that loan interest rates would depend on one’s credit score. Also, you should always remember to keep the EMIs within a management limit. Experts recommend that your EMIs should be a maximum of 40 per cent of your salary. This should include your home loan and other loans.

Also, most festive offers are only applicable to loans approved for a particular duration, generally around Diwali. “Make sure you can complete all of the requirements in time to receive the rewards, as delays could result in missing out,” says Banerjee.

Additionally, ensure that your credit score is in good shape, as it will influence the interest rates and terms you are offered. “By considering these factors, you can make an informed decision and avoid financial strain in the future,” says Kaushik Chatterjee, Founder & CEO, Unifinz Capital India, an NBFC specialising in retail lending.