Mortgage Loan

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Mortgage Loan

 

Interest Rates & Charges


Different banks/NBFCs offer mortgage loans at different interest rates and with different processing fees due to a variety of factors.  The interest depends from institution to institution.  

 

Applicable Fees

 

Interest rate

 

A mortgage Loan interest rate starting at 7% and up to 15%, depends on the institutions, which would help you control costs and keep your EMIs manageable. Fund all types of personal or professional costs while assuring the best possible return.

 

Processing charges

 

A processing fee is charged when a Mortgage Loan is processed. The application fee is a one-time charge imposed during the submission process. Fees can be varied from institution to institution, generally, the fee is 1% of the approved loan value, along with the applicable taxes.

 

Other Charges

 

Some other charges like Foreclosure, Cheque bounce charges, late payments, documents retrieval charges, CIBIL report, pre-payment charges, maybe more, etc. Charges can vary dependent from bank to bank.

Mortgage Loan

Types of Mortgage Loan Interest Rate

There are two kinds of Mortgage Loan interest rates: fixed and floating.

Fixed Interest Rate

Here, the rate of interest charged on the Mortgage Loan amount will remain constant throughout the loan repayment period. You know your Mortgage Loan EMI obligation at the start of the tenor, allowing you to plan your monthly budget accordingly.

Mortgage Loan
Mortgage Loan

Floating Interest Rate

Here, Mortgage Loan interest rates could change depending on changes to the Marginal Cost of Lending Rate (MCLR), which is the base rate set for banks by the RBI. With changes in MCLR, the interest rate on loans also gets revised. With a lower interest rate, the repayment amount also reduces. On the other hand, if the interest rates increase, your EMI obligation will also increase. A floating Mortgage Loan interest rate makes it difficult for you to ascertain your monthly financial obligation.

Mortgage Loan Interest Calculation Method

There are two methods to calculate interest: flat rate method and the reducing balance method.

In the flat interest rate method, the interest rate is based on the complete loan amount you pay during the repayment period. In case of reducing the balance method, the rate of interest on the Mortgage Loan will be considered and calculated on the basis of the outstanding loan amount.

Flat Interest Rate Calculation

EMI = (principal + total interest payable) / loan tenure in months i.e. total interest payable = P x r x n/100

Where, ‘P’ is the principal loan amount, ‘r’ is the rate of interest, and ‘n’ is the loan tenure in months.

Floating Interest Rate Calculation

EMI = [P x r x (1 + r) ^n] / [(1 + r) ^(n-1)]

Where, ‘P’ is the principal loan amount, ‘r’ is the rate of interest, and ‘n’ is the loan tenure in months.

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