Pyramid: Home Loan Myths in India- Part 1

The pandemic has highlighted the need to own your safe havens. Add to it the onus of the WFH culture and hybrid modes of work, and our need for space increases. While COVID-19 negatively impacted the real estate sector, the post-era has been nothing short of a boon. With policies and implementations for recovery in full swing, and the ever-rising demand for housing, the field is in full bloom.

When it comes to buying homes, housing loans are the number one choice to raise capital for 99% of the buyers. However, despite their popularity as a standard financial instrument for purchasing a home, there are many misconceptions and myths about home loans in India. Let’s together bust a few myths in this blog below.


Myth 1: Banks provide 100% loan amounts

Fact: The most prevalent myth revolves around housing loans. On the contrary, the banking sector has a few rules prescribed, one of which is that no bank in India can provide a borrower with 100% of the property value as a home loan. At the most, in rare-best cases, a bank can lend you up to 90% of the property amount to the borrower. S/he has to follow numerous terms and conditions for that to happen.


Myth 2: High-interest rates mean inflated EMIs

Fact: Another myth that many believe to be true is that high-interest rates levied mean high monthly instalments. That’s, however, not true. The interest rate levied by lenders depends on multiple factors like the borrower’s age, income, loan tenure, etc. In many cases, banks might increase the tenure of loans to ensure borrowers do not have to pay a huge instalment every month and that their finances are managed.


Myth 3: Loans with low-interest rates are the best

Fact: A common idea in the market is that home loans offered with lower interest rates are the best. But this is not always true. If a lender offers a low rate of interest but has additional charges like legal valuation fees, the penalty for prepayment, etc., you might just end up paying a lot more than anticipated in the long run. This is why borrowers must always compare home loan options from multiple financial institutions before opting for one. Also, don’t forget to read the fine print and T&Cs to not fall for false promises.


Myth 4: Property Insurance is not the borrower’s responsibility

Fact: Irrespective of what your lender offers or not, the property must always be protected against natural disasters. Housing loan agreements for a lot of institutions clearly state that the property must be protected against natural calamities like fire, floods, etc. In many cases, the bank adds the cost of property insurance to the home loan borrowed by the lender. This, in turn, could result in the additional payment of the premiums, which will be payable with the monthly instalments by the borrower. Therefore, when buying a property and opting for a loan, ensure this point is discussed in depth with the bank.


Myth 5: RBI fixes the home loan interest rates

Fact: Another common myth that surrounds home loans is that the Reserve Bank of India (RBI) is in charge of fixing the interest rates for home loans. Instead, most lenders and financial institutions decide their home loan interest rates depending on multiple factors like the ones mentioned above. Interest rates, therefore, vary across institutions and, at times, across individuals, leaving the borrower with multiple choices in terms of picking home loans that best suit their requirements.

At Pyramid Lifestyle, we have redefined premium living and lifestyles in cities with our dynamic foray into real estate around the country. Our homes in and around Pune are the perfect escape from the city’s buzz for a good night’s sleep. These flexible homes are crafted to provide our buyers with everything they need for an empowered life. Similarly, by busting a few of the myths that surround housing loans in our country, we aim to empower home buyers to make decisions that suit their interests the best.

But these aren’t the only ones. Stay tuned to know more myths that revolve around home loans in India. Meanwhile, to read more about housing trends and other blogs, or about Pyramid Lifestyle and its projects, visit



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