Before looking for ways to finance a home purchase, you should understand the 'home loan interest rates' to help you decide which bank to borrow from appropriately. There are two types of 'home loan interest rates':

Fixed Rate

      A fixed interest rate is a specific number that remains unchanged regardless of fluctuations in the bank or cost. The bank or lending source will set a percentage that must be paid annually according to the terms of the contract, and this rate will remain constant for a specified number of years.

Floating Rate

      A floating interest rate adjusts up or down based on the bank's costs or performance. The bank will periodically announce changes based on reference interest rates. Each borrower will receive a different floating interest rate depending on their ability to repay, the difference between income and expenses, or the value of collateral assets, etc.

The interest rates commonly referenced for floating loans are MLR and MRR:

MLR (Minimum Retail Rate) is the minimum interest rate charged to high-quality corporate clients with good financial history and sufficient collateral. This rate is typically used for loans with a fixed term, such as business loans, etc.

MRR (Minimum Retail Rate) is the minimum interest rate that commercial banks charge to high-quality retail clients (individuals), such as home loans, credit card loans, personal loans, etc.

        For most home purchases, banks will offer a fixed interest rate for the first 1-3 years (depending on promotions and specific projects). After that, they will start applying a floating interest rate. Understanding each type of interest rate will help you calculate and compare the rates from different banks to determine which one offers the lowest interest rate that meets your needs.

Estimate Your Borrowing Capacity

        After reviewing the interest rates from various banks, you still need to choose a home loan that fits your borrowing capacity and personal needs. Sometimes, the home you want to buy may not qualify for the lowest interest rate, but you can select the best rate that you can afford.

        You can start estimating by calculating the loan to find out the monthly payments based on the interest rates from each bank, while comparing the value and offers from each bank to see if they meet your requirements, such as the percentage of the loan amount to the appraised or purchase price, various fees, loan duration, additional discounts, etc.

        After that, compile all offers and options into numbers and estimate your borrowing capacity throughout the loan period according to the interest rates set by each bank. This will help you secure a home loan with a low interest rate that you are most satisfied with.

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