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Quick Guide for Securing a Better Interest on Home Loan in India
Purchasing a new house is a huge step in one's lifetime. While the prospect of purchasing a
new house always seems
exciting, it is imperative to plan the step towards it prudently. A well-designed move can
save the buyer financial
strain. At the same time, it can also ensure a comfortable life. It is essential to follow
what most financial experts
recommend. For instance, they say that it is always a good idea to get an idea of the value
of the property. It is also
wise to consider investing in properties after ascertaining that they are being sold at the
most appropriate price.
Therefore, some amount of legwork is needed before starting the buying process.
If a borrower has identified the house and is now looking for a housing
loan, some tips can come in handy. The following
home loan tips will help secure the most appropriate interest rate. It will also help
keep the overall home loan
interest cost low during the home loan tenor.
The lowest home loan interest rates are reserved for female borrowers. It
is common for male homebuyers to co-borrow
with wives to avail of the lowest rate. This encourages women to seek housing loans
because of the concessions on the
interest rates, and the fuss-free eligibility criteria.
The borrower should maintain a healthy credit score to avail of a home loan with
attractive benefits. A borrower who has
a credit score of more than 750 is likely to avail of a home loan at an interest rate
that is on the lower side.
Therefore, a borrower must keep a tab on credit scores always. They can check their
credit score online for free from
time to time. If the score is not sufficient, then they must boost it before applying
for a big loan. However, there are
ways to boost your chances of approval despite a low credit score, which includes having
a dependable co-applicant in
your loan application.
When a borrower walks into the bank or explores home loan interest rates online, they
need to consider the bank’s
external benchmark rate. Lenders offer external benchmark linked loans that are linked
to the RBI’s repo rate. The
benefit of seeking this rate of interest is that when there are favourable market
conditions, the benefit of lowered
EMIs will be passed on to you, through your interest rate.
Irrespective of whether a borrower chooses a bank or non-banking finance company, it is
always a good idea to put down a
sizeable amount as your down-payment if you’re able to afford it. The higher is the
down-payment amount, the lesser you
will need to borrow from your lender. This translates to lower EMI payouts, and in fact
– a higher chance of your home
loan application being approved, given your financial stability and repayment capacity.
As a borrower with a healthy credit score, who meets all the lender’s eligibility
criteria, you also hold some power to
negotiate better lending terms, including a lower interest rate and a longer loan tenor.
This is obviously easier for
those with a credit score of 750 and above, with a strong repayment capacity. Other
components that make a difference
are your source of income, employment and your existing rapport with the lender.
Lenders typically prefer borrowers who have been employed steadily for at least two
consecutive years. If they have been
unemployed for a significant period or switch jobs too often, the chances of getting a
favorable home loan interest rate
may be low. Thus, there is limited scope for negotiation also.
If the principal amount and interest accrued are divided over a longer tenor, a borrower
ends up with a relatively lower
EMI. However, the borrower also must pay the housing loan EMI and the interest for a
We recommend borrowers to come up with their own repayment plan, well in advance before
they apply for a home loan so
they know what kind of financial commitment they are getting into, and your lender is
also confident in your repayment
Once a borrower has clarity concerning the home loan EMI and is also comfortable with the
down payment, it is then, time
to compare home loan interest rates quoted by several lending institutions. A borrower
must check home loan interest
rates and associated fees, besides the loan tenor and amount. The charges depend on
eligibility factors like age,
income, and CIBIL score. For more information on home loans and interest rates,
borrowers must visit the official
website of the chosen lender.
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