Home loan interest rates have come down to the lowest level ever. But do you know that the home loan is currently available at 3.3% interest? We explain how your home loan is getting so cheap.
Home loan interest is below 7%
At present, almost all banks or lending companies have kept the interest rate below 7%. Union Bank has reduced it to 6.45%. While the rest have kept it between 6.5 to 6.9%. In such a situation, this is the best time to take a home loan. This is also good because there is also a slightly cheaper property in the property market that has recovered from Corona.
Property is also cheap
That is, with a cheap home loan, if you bargain a little in the property, then you can get the benefit there too. We tell you a three-stage home loan. How interest was charged on home loan for this year, 2002 and 2000. How it reached its lowest level in 20 years. However, interest rates will go up from next year, because after the recovery in the economy, interest rates are now going up in most countries.
See how was the interest rate in three steps
In the years 2000, 2002 and 2021, suppose you have taken a home loan of Rs 31.90 lakh for 20 years. In the year 2000, you had to pay an interest of 13.25% for this. In that tax exemption was 20 thousand rupees. Whereas the tax rate used to be 34.5%. The installment you used to pay every month was Rs 4.21 lakh. But even after this your interest was not paid. You had to pay Rs 1600 more. That is, the entire amount used to go in interest only.
However, you used to save tax of 32,775 during that time, so the interest would have gone to Rs 389,900. On this payment, you used to get an effective interest rate of 12.2%. But in the year 2002, if you took the same loan for 20 years, then you had to pay interest at the rate of 9.10%.
Understand the math of interest
| 2002 | 2000 | |
| Loan Amount | 31.90 lakh | 31.90% |
| Interest Rate | 10.75% | 13.25% |
| Tax Exemption | 20 Thousand | 20 Thousand |
| tax Rate | 31.50% | 34.50% |
| Every Year Payment | 359,400 | 421,068 |
| Share Of Interest | 342,925 | 422,675 |
| Principal Amount | 16,475 | (1,607) |
| Save Tax | 53,550 | 32,775 |
| Interest payment | 289,375 | 389,900 |
| Interest on Home Loan | 9.1% | 12.2% |
(All terms are for 20 years, amount in Rupees)
In 2002 the interest rate was 10.75%
In 2002, interest rates had come down to 10.75%. At that time also the tax exemption was only 20 thousand rupees. The tax rate was 31.50%. The installment you used to pay every year was Rs 359,400. Out of this, interest part was Rs 342,925. You used to deposit Rs 16,475 as principal thereafter. In this way you would have saved Rs 53,500 in tax. You used to pay a total of Rs 289,375 as interest. The effective interest rate thereafter was 9.1%.
Cheapest home loan in this year
But in 2021, all this math turned completely upside down. Now this year if you took a home loan of 31.90 lakhs for 20 years and if its interest rate is assumed to be 6.70%, then the effective interest rate is now 3.3%. At present the tax exemption is Rs 1.50 lakh. That is, in the interest you are paying annually, you will have a tax claim of Rs 1.50 lakh.
The tax rate is currently 30.9%
After this the tax rate is currently 30.9%. On this basis, you are making an installment payment of Rs 363,760 every year. Out of this, the interest part comes to Rs 213,720. Whereas the part of principal amount i.e. principal amount is Rs 1.50 lakh. On this basis, you save tax of Rs 1.08 lakh in a year. Whereas you pay 1.05 lakh rupees in a year as interest. Thus, the effective interest rate of the home loan is 3.3%.
Home loans are easily available
Home loans are easily available at this time. If your CIBIL score is above 800, then it is easier for you to get the loan and the processing fee is also not charged anywhere at this time. Which is usually 25 to 50 thousand rupees. In such a situation, this is the right time for a home loan, on which you can decide.
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