Save on Your Home Loan Interest
While the prospect of purchasing a new house may seem exciting, it is imperative to plan your borrowing journey. The interest rate at which you repay your Home Loan is an important aspect of your repayment process, as it can determine how feasible the loan can be.
Borrowers should consider doing their research and talking to various lenders to secure a favourable interest rate. This can help to make their Home Loan repayment more convenient. To ensure this, here is a list of tips that can help you secure a better interest rate.
Tips to Secure a Better Interest Rate on Your Home Loan
Maintain a Healthy Credit Score
Borrowers should maintain a healthy credit score to avail of a Home Loan with attractive benefits. A borrower with a credit score of more than 750 is likely to avail of a Home Loan at a more competitive interest rate.
Borrowers can check their credit scores online for free. If your credit score is below average, focus on boosting your CIBIL score to enhance the quality of your Home Loan application.
Additional Read: Top Five Ways to Manage Your Home Loan Burden
Link Your Interest Rate to the Repo Rate
Borrowers also have the choice to link their Home Loan interest rates to an external benchmark, such as the Repo Rate. The benefit of linking your interest rate to the Repo Rate is that whenever a reduction in the rate is announced, your Home Loan interest rate will decrease and vice versa; it will increase in case there is a rise in the Repo Rate.
Make a Bigger Down Payment
It is a good idea to put down a sizeable amount as a down payment. The higher the down payment amount, the less you will have to borrow from your lender. A lower loan amount translates to lower EMI payouts and a higher chance of your Home Loan application being approved for a low interest rate, given your financial stability and repayment capacity.
Negotiate Better Terms
As a borrower with a healthy credit score who fulfils the housing loan eligibility criteria, you also hold some power to negotiate for better lending terms, such as a competitive interest rate and a favourable loan tenure. This can be easier for individuals with a credit score of 750 and above. Other factors that make a difference are income, age, and work experience, among others.
Research Options
Researching loan options and talking with different lenders allow borrowers to compare interest rates, fees, and terms offered by each institution. Additionally, understanding lender requirements and market trends helps borrowers prepare stronger loan applications, improving their chances of receiving competitive offers. This will not only give you an idea of the kind of interest rate you can get but also arm you with more information and better negotiating power.
Make Prepayments When Possible
When you make prepayments, you do not directly reduce the Home Loan interest rate, but you reduce the overall effective interest rate by lowering the total interest outgo. Individual borrowers who have a floating interest rate Home Loan can make prepayments at any time without paying any penalty. However, this may change for individual and non-individual borrowers who have loans for business purposes.
Opt for a Home Loan Balance Transfer
Home Loan Balance Transfer refers to the process of transferring one's Home Loan from one lender to another in return for better interest rates and other facilities.
Additional Read: Important Factors that Affect Your Home Loan Interest Rate
Final Thoughts
While considering the costs associated with borrowing a Home Loan, borrowers must also account for the other fees and charges such as a processing fee. Click here to obtain additional information on specific Home Loan interest rates.
FAQs
The interest rate applicable on your Home Loan depends on your credit score, income, and FOIR, among other factors.
Yes, you can benefit from a lower interest rate during the loan tenure through a Home Loan Balance Transfer. This involves transferring your Home Loan to another lender offering better interest rates and favourable terms.
A good CIBIL score of 750 or above can help you secure a better interest rate, as it indicates high creditworthiness.
You can calculate the impact of different interest rates on your EMI using a Home Loan EMI Calculator. Enter the loan amount, tenure, and interest rate to compare how the EMI changes with each range.
DISCLAIMER:
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.
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