How to Choose the Right Home Loan: 6 Expert Tips

30 May 2024|

2 min read |

by ICICI Securities Team

Securing the ideal home loan often proves to be a daunting task, just like finding the perfect home. With a myriad of financial institutions offering a plethora of attractive loans and deals, choosing the right loan or lender becomes a significant challenge. In this article, we will discuss the five essential factors you must consider to secure the best deal.

TIPS TO CHOOSE THE PERFECT HOME LOAN

Loan From Banks Or NBFCS/HFCS:

You can acquire a loan from a bank, a non-banking financial company, or a home finance company (NBFC/HFC). However, most people prefer bank loans because of the interest rates. Since the loan interest rate given by the bank is linked with a benchmark, i.e., the Repo rate, it offers a lot of transparency, and the rate benefits are transferred to the customer faster. On the contrary, the interest rates offered by NBFC/HFC are tied to their internal benchmark called Prime Lending Rate (PLR), which may not always transfer the interest rate benefits to the borrower quickly.

Interest Rates:

Interest rates are usually critical when looking for a loan. However, they are significant when it comes to taking a home loan. Given the amounts involved, even a slight change in the interest rate could result in higher payments. Therefore, your first step should be to conduct a comparative analysis of the interest rates provided by different lenders before moving on to any other factor.

LTV Ratio:

The loan-to-value ratio is the maximum home loan amount to the property's value. Any remaining amount is to be paid by the borrower to the lender in the form of a down payment. This ratio varies from lender to lender. As per RBI rules and regulations, a lender can only lend up to 90% of the property value for loans up to ₹30 lakh, and if it is above the threshold, lenders can lend 75-80% of the value.

Eligibility Requirement:

Lenders usually grant loans to people they know can repay the loan after a stipulated amount of time. Before taking out a loan, you need to meet a few eligibility requirements, such as your income level, age, CIBIL score, and others. To check your home loan eligibility, you can visit any financial institution's website and use the home loan eligibility calculator. This helps you understand how much of a loan you would be eligible to receive.

Loan EMI:

The next thing on the list to consider is Equated Monthly Instalments (EMI). Your EMI depends on the loan amount taken, the downpayment amount, and the interest rates. Ensure that the EMI amount you take is affordable and accessible to pay. You can also use a home loan EMI calculator to determine this amount.

Processing Fees:

Lenders charge a processing fee on your home loan application; this varies from lender to lender. Banks usually charge up to 2% of the applied loan amount. Compare the processing fee with other lenders, as it will help you make a better deal.

CONCLUSION

In conclusion, choosing the right home loan requires careful consideration of various factors. By meticulously comparing these aspects across different financial institutions, you can secure a home loan that best suits your financial situation and helps you achieve your dream of homeownership. Always compare lenders to make the best deal possible.

Disclaimer

ICICI Securities Limited has its registered office at ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400025, India, Tel No:- 022 - 2288 2460, 022 - 2288 2470. The non-broking products / services like iLearn and Financial Learning are not exchange traded products / services and ICICI Securities Ltd. is just acting as a distributor/ referral Agent of such products / services and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanism. iLearn is not an exchange traded product/service of ICICI Securities Ltd. All disputes with respect to the activity on the platform would not have access to Exchange investor redressal or Arbitration mechanism.

ICICI Securities Ltd. is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. ICICI Securities Ltd. is a SEBI registered with SEBI as a Research Analyst vide registration no. INH000000990. Name of the Compliance officer (broking): Mr. Atul Agrawal, Contact number: 022-69997051, E-mail address: complianceofficer@icicisecurities.com Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. ICICI Securities Ltd. and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Such representations are not indicative of future results. The securities quoted are exemplary and are not recommendatory. AMFI Regn. No.: ARN-0845. PFRDA registration numbers: POP no -05092018. ICICI Securities Ltd. acts as a Composite Corporate agent having registration number -CA0113. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund, Corporate Fixed Deposits, Bonds, Alternate investment funds, Tax planning, Succession planning, NPS, IPO, Investment Advisory and Loans related services are not Exchange traded products and ICICI Securities Ltd. is acting as a distributor to solicit these products. Please note, Insurance related services are not Exchange traded products and ICICI Securities Ltd. is acting as a corporate agent to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The non-broking products / services like Research, etc. are not exchange traded products / services and all disputes with respect to such activities would not have access to Exchange investor redressal or Arbitration mechanism. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.

Did you enjoy this article?

497 people liked this article. Share Feedback

Recent Articles

View all

HOW TO TRADE GOLD IN COMMODITY DERIVATIVES MARKET IN INDIA

Gold is one of the world's most actively traded precious metals and is widely used for investment, jewellery and industrial applications. It is also considered a safe-haven asset during periods of economic or market uncertainty.

192 views

3 minutes

07 Sep 2026

Global Commodity Exchanges: NYMEX, COMEX & LME and Their Link With MCX

In this article, we’ll explore the three exchanges that matter most: NYMEX, COMEX, and the London Metal Exchange (LME) and their link with MCX.

353 views

1 minutes

31 Aug 2026

Mainboard IPO: Meaning, Eligibility and Key Benefits

Explore the meaning of a mainboard IPO, SEBI's eligibility routes, NSE and BSE listing rules, key benefits, and the checks investors should make before applying.

1 k views

4 minutes

13 Aug 2026