BRINGING INSIGHT INTO FACTORS DRIVING MORTGAGE INTEREST RATES IN INDIA
We all know that the legal agreement done by the bank, building society, association with the customer, lending money at rate of interest in exchange of a security is known as mortgage.
Rate of Interest charged on the mortgage is known as the mortgage interest rates. Imagine a situation, where in you do not have any money, and will pledge your asset/property in exchange for some money. It will come with a rate of interest in India. Again the rate of interest will change according to property, type and location of the asset.
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Factors influencing the mortgage interest rates in India are given below as follows:
Location of Your Asset/Property: Location of your asset/property in rural or urban India would make a huge difference. You will experience a different pricing, when your house is in rural area. A different price will be experienced, when your house is in urban area. Getting proper loan, for your house in rural area is very challenging compared to house in urban area.
Duration of the Loan: As name suggests, gives the details of the time taken to clear loans in India. There are two loans, short term loans and long term loans. You must analyse about the loan natures, before selecting one.
Short Term Loan will have
è High Monthly Payments
èLower rate of interest
Long Term Loans will consist of
èHigh interest rates
èLow monthly payments
Types of Interest Rate: Two kinds of rates namely, the fixed interest rates and the adjustable interest rates are present in India. Fixed rates are stable in the market and adjustable rates remain same for some time in market and later onward goes up and down depending on the market situation in India.
Credit Score/Credit Ratings: Your credit score/ratings/rankings plays important role in deciding, whether you can opt for clearing of the loans or not. In India the credit ratings is given by CIBIL (Credit Information Bureau of India Limited). Your credit score is analysed using credit report, showing all your financial transactions, payment history and loans/mortgages that is taken by you.
To be precise, person with higher credit score gets loan at lower interest rate. Person with lower credit score, will get loan at higher interest rate/or may not get loan at all.
TO KNOW MORE ABOUT FACTORS DRIVING MORTGAGE INTEREST RATES: