Securing a Better Interest Rate on Your Home Loan: A Step-by-Step Guide

A Quick Guide to Securing a Better Interest on Home Loans-Banner_WC

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Quick Guide for Securing a Better Interest on Home Loan in India_WC

3 min 23 Jan 2024

tips to avail better home loan interest rate

Highlights

Tips for Securing a Better Interest Rate on a Home Loan
How Your Down Payment Amount Can Help Save on Interest

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 for Securing a Favourable Interest Rate on a 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 more a 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 whenever a reduction in the rate is announced, your Home Loan interest rate with 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 lesser 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 tenor. 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.

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.

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