Pyramid: Home Loan Myths in India Part -II

The pandemic brought to light the need to have your own places and a diverse spread of investments for a secured future. As a result, in this post-COVID era, the demand for real estate and housing has been at an all-time high, and the sector has witnessed upward recovery trends.

In India especially, loans are the preferred choice of homebuyers when financing capital for their homes. However, despite their popularity as a standard financial instrument, there are many misconceptions and myths that surround home loans in our country. In the previous blog, Pyramid Lifestyle helped bust a few of the. Here are four other popular myths about home loans in India and their fact checks.


Myth 6: Fixed rates of interest for home loans are better than floating rates of interest

Fact: While many commonly believe that fixed interest rates are a better alternative for home loans than floating interest rates, this is not true. Although fluctuations in the market led to frequent changes in the floating interest rate, it is still generally 1.5% to 2% lower than the fixed interest rates. Also, market fluctuations might not last too long, and in the long-term, a borrower will end up paying lesser with a floating interest rate than the traditional ways.

Myth 7: Borrowers immediately benefit from the RBI rate cut

Fact: Despite the fact that all new floating rates for home loans in India are linked with the RBI’s repo rate, many banks and institutions are not as swift in implementing the rate cuts as they should be. Any hike in the repo rate, however, makes a quick impact on your home loan EMIs

Myth 8: Borrowers have to pay heavy penalties on foreclosures and prepayment

Fact: When it comes to repayments and foreclosures, a myth surrounding home loans is that the banks and other financial institutions levy heavy penalties and fees for prepayments or foreclosures of housing loans. This, however, isn’t true. Reserve Bank of India’s instructions and guidelines state that banks and financial institutions cannot charge any prepayment/foreclosure charges on floating rate-based home loans. Such charges may be levied on fixed rate-based home loans, which may vary across financial institutions.

Myth 9: You should directly apply for a loan with your bank

Fact: A lot of borrowers believe that it is best to directly apply for a home loan with your bank or financial institution. Borrowers should, however, take into consideration that the lender will reach out to credit bureaus to understand the borrowers’ credit standing or score. In the case of multiple applications, it negatively impacts your score and hinders your chances of availing of a loan that best suits your profile and requirements. It is, therefore, in the best interest of the borrowers to make loan enquiries through FinTech portals as these soft enquires get you diverse options and will not hamper your credit score.

At Pyramid Lifestyle, the interest of homebuyers and their good lies at the core of our values and builds. Our homes, built with excellent foundations and crafted for a life of luxury, come with every amenity and provision our dwellers need for an empowered life. By busting these myths that surround housing loans in our country, we aim to empower home buyers to make the best choice in tune with their comfort and convenience.

To read more about Pyramid Lifestyle, their dynamic builds, and more about real estate, visit



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