How Can you Benefit from Festival Discounts on Home Loan Rates?

Mar 09, 2017

If you have been on the sidelines of buying a house for last few years, then you would have seen that lenders come out with attractive discounts during festive seasons. They offer discount on interest rates and waiver of processing fees/charges etc.

So does it make sense to time your house purchases to coincide with festivals? We try to look at it from financial perspective.

Suppose that the regular home loan rates are 10.75%. But during festivals, the lenders have come out with special scheme where the borrowing rates will be reduced to 10.25%. How much can it mean in savings for you?

If you are planning to take a home loan of Rs 50 lac for 20 years, then it can save you almost Rs 4-5 lacs during the full tenure. That is not a small amount by any standard. Infact, it is almost 10% of the actual loan amount!

Processing fees are reduced too during festival season loans. So let's say that you lender is ready to reduce your process fee from 0.25% to 0.1%, how much can it help you save? The answer is about Rs 8000 - which ofcourse is not a big amount.

But that tells you that if you have a choice between having your loan processing fee waived off (or reduced) and reduction in interest rates, then you should go for the latter, i.e. reduction in interest rates. It is because it will help you save a lot of money during the tenure of the loan. It is important to understand this because when festival season is near, you will be bombarded with hundreds of officer which combine these two basic benefits in some for or the other. But you need to be wise enough o go with the offer that saves you more money. Isn't it?

So if you are waiting to purchase a house, this might just be the best time to do it. But do analyse all the offers that you are being shown.