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One point that every user agrees on is that opting for the perfect housing loan interest rates is very important. The interest rate tends to be most borrowers’ first criterion for loan selection. Lack of information, though, leaves most borrowers consenting to a home loan that is not in their best interest. So, why is it important to pay equal attention to other aspects of home loan?

First of all, the type of home loan affects the amount of interest and EMIs that you pay in the long run. For the most part, interest rates vary substantially if you opt for floating interest rates. The low and doable interest rates will basically hike up and make it challenging to pay your EMIs. Fixed interest rates, on the other hand, can vary after a stipulated time frame. Keeping all this in mind, it is important to pay attention and select the type of rate that you can comfortably pay.

Secondly, you must consider the term of your loan. A housing loan is the longest financial contract taken up by most people. Most EMI calculators will show you that a longer duration may imply lower EMIs. This, however, also means that you pay more amount as interest. So, how much are you agreeable to pay as interest? How much EMI can you afford to pay? These factors make it important to carefully consider a home loan term before opting for it.

Thirdly, the terms and conditions need to be studied carefully. This is because the loan taken can impact your financial state over a period of 20 to 30 years. Would you want to pay additional EMIs and finish off the loan early? If you do, it is advisable to check the pre-payment clause in your home loan agreement. You may also want to top up your home loan for home renovation, which certain banks don’t allow. In terms of legal fine print, there may also be several liberties awarded to the bank or financial organization that you are unaware of. Therefore, it is best to take your time and read that huge document very carefully, preferably with a financial expert who could provide much clearer insights.

An important question that most people ask is if the home loan interest rates affect the amount you pay? Definitely, it is the first factor that affects it. But other factors like the type of interest rate, duration along with other terms and conditions also have an effect on the same. Therefore, it is necessary to make comprehensive and well-informed decisions. Sometimes, the loan which doesn’t have the lowest rate comes instead with the right combination of other factors that add up to a well rounded product that is customized to your needs.

A Fixed deposit is a standard safe investment employed by most individuals. Without thorough research though, different FDs available may appear to be the same. There are, however, several customizable variations available as well. Keeping this in mind, it is best to consider all the possible permutations and combinations before making your final decision. These factors include:

Organization: Most people fail to look for variation here. The lack of research can potentially cost you the best interest rates available. While the traditional approach is to invest in the bank that you use for personal banking, it may not offer you the best rates. While the difference between rates might not be drastic, owing to the competitive nature of the market, it is always better to get more rather than less.

Payout: This is a very important variation between fixed deposits in India . Depending on your strategy, users can ask for monthly, quarterly or annual payouts on the deposit. You can also ask to re-invest the interest earned, in order to gain even more returns. This re-investment feature is similar to the growth feature of Mutual funds, but is not available in every bank or financial institution. It is important, though, to use these options based on your financial requirements, expenses and monthly cash flow.

Time: There are several different time frames available. The minimum period for a fixed deposit investment is 7 days while the maximum period can vary from 5 to 10 years. The best interest rates come from long term investments, though. Most people hesitate to invest for such a long duration and instead opt for the period of a year instead. The relatively shorter period, if you have certain financial requirements in mind, offers the right balance of liquidity and interest rates for most people. As an investor, if you don’t foresee the need or premature withdrawals, you should opt for the longest possible duration as it will result in the highest return. For the most part, the interests for these deposits are almost the same as what is earned on a savings account.

Age group: Senior citizens get higher interest rates in comparison to the lower age group, which could be a big advantage for some. A common strategy to avail this advantage is to invest in the name of your family member who is a senior citizen. This strategy, though, has some limitations. While the returns are higher, it is tougher to get premature withdrawals or overdraft facility if you invest in someone else’s name.

Overall, a fixed deposit has high liquidity and decent rewards. Professional investors, though, don’t favour this as it comes with lower returns than the stock market. Keeping in mind that you will receive around 8 to 10 percent interest, this is understandable. The right strategy will be to use this tool as a potential safety net to help sustain losses incurred in the stock market. You can also use the high liquidity of this investment during any kind of emergency.

Home loan protection plans (HLPP) are unique insurance plans for home loan borrowers. Simply put, this gives a lump sum benefit in the event of the death of the insured, which can be used to pay off the pending home loan amount to the bank or housing finance company. This basically helps to safeguard your decision of buying a home using a housing loan . That being said, it is important to know a few facts about this to make the best decision possible.

• It is a term insurance.

This cover works as a term insurance i.e. provides coverage at fixed rates of payments for a limited period of time. In case of death, the nominee gains full benefit, which is the lender, in case of a house loan. While most mortgage organizations have collaterals, this insurance cover is a great asset for the insurer as it can ensure that the borrower’s family don’t lose their house in the event of an accident.

• The premium is a very small amount.

Like term insurance, the premium on this is a small amount and can be paid annually or in a single payment. Most Indian housing finance companies also allow you to include it in home loans, if you don’t have sufficient balance for paying the premium.

• There are no benefits in the event of survival.

This type of policy has no benefits if the insurer survives. This drawback is the main reason why low cost insurance plans are available in the first place. However, this home loan insurance cover is valid for the entire duration of the loan. That makes it a great and affordable safety net in case of death as your home stays within the family. For most people, this is an important cover as their home is the largest asset for them.

• You can use term insurance for the same purpose.

If you already have term insurance of an equivalent amount and time period, you may not need to buy HLPP separately and can use the same. In most cases, people need to buy it as they don’t have an existing term insurance policy of equivalent value.

The safety of this policy is very important to people who do not have any major investments that can be used to repay pending amounts in EMIs. While this is not a necessity for people buying homes as an investment, it can be deemed as a requirement for self-occupied property purchases with housing finance.