It is that time of the year when it is raining festive offers on home loans. Almost every bank is trying to lure customers with attractive offers, from low-interest rates to zero processing fees.

The offers

India’s largest bank State Bank of India is offering home loans at 6.7 per cent, for any loan amount. However, to avail of this offer, your CIBIL score needs to be 800 or more. The offer is valid till 31 December 2021. The bank has also waived off the processing fee on home loans. Earlier, if you took a loan of more than Rs 75 lakh, you had to pay an interest of 7.15 per cent. Now the same loan can be availed of for 6.70 per cent, a savings of 45 basis points (bps). One bps is one-hundredth of a percentage point. For a Rs 75 lakh loan for a tenure of 30 years, this leads to a saving of Rs 8 lakh.

Non-banking finance company HDFC Ltd is also offering home loans at 6.7 per cent. This is applicable to any loan amount and to persons of any employment category.

ICICI Bank also joined the bandwagon to offer repo-linked home loans at 6.7 per cent. The processing fee starts from Rs 1,000.

What should you do?

With home loan interest rates at a record low, this may be a good time if you are looking to buy a house. “In the current scenario, given the stress in the market, the scope of further decline in interest rate is very less. In this context, if customers have any requirement, they should avail of such offers,” says Anant Ladha, founder, Invest Aaj For Kal, a financial planning firm.

Agrees V. Swaminathan, CEO, Andromeda and Apnapaisa, a loan distribution firm, “Experts believe that the home loan rates may not go down any further than what we have presently. In fact, they are of the opinion that once the economic activity gains momentum across industries, RBI may hike the lending rates which could potentially increase the home loan rates as well.”

This is a good time to avail low-interest rate offers on home loans. Moreover, property prices have remained at the same level. “During the first wave of Covid, it was believed that property prices will hit rock-bottom, which didn't happen. Property prices have remained almost the same, with maybe a slight dip in some pockets. However, the home loan rates have slumped to a 15-year low, thanks to RBI's slashing of repo rates,” says Swaminathan.

Things to keep in mind

While a low-interest rate regime is a good reason for you to take a home loan now, there are a few things to be kept in mind. “Many of these festive offers often come with specific clauses such as a high credit score, profession of the borrower, up to a certain loan amount only, etc. Borrowers are required to go through the exact terms carefully before finalising,” says Swaminathan.

A borrower should shop around for the best home loan interest rates and not make any decisions based on snazzy advertisements. “Also, see if any further negotiations are possible. Currently, borrowers are in the driver's seat as banks are competing heavily with each other for customers,” says Anuj Puri, chairman, ANAROCK Group, a real estate services form.