The affordability of a home loan is significantly dependent on the interest rate. This also ensures that the monthly financial obligations are within the capability of a prospective borrower. Regardless, if an individual is looking to borrow some funds for a home loan, they must know a few parameters to get the lowest home loan interest rate in India.
Smart tips to reduce the home loan interest rate
Individuals should be aware of interest rates on house loans as they might vary from lender to lender. A lending institution can evaluate the loan amount requested and the borrower’s credibility before setting an interest rate.
However, the smart tips to decrease house loan interest rate effectively are provided below:
Tip 1: Enhancing credibility
The home loan rates in India are greatly influenced by multiple variables, including credit score and repayment history. Therefore, as part of their intensive inquiry, lending institutions examine borrowers’ reliability by looking at their credit records.
Individuals with a 750+ CIBIL score and a solid repayment record will likely receive better terms. Also, these candidates can easily convince a lender to charge an affordable interest rate for a house loan.
Nevertheless, to increase trustworthiness, prospective home loan borrowers can put some strategies into practice, such as making timely payments, paying off past due balances, avoiding repeated loan inquiries, etc.
Tip 2: Choosing a shorter repayment tenor
Selecting the appropriate tenor is another tip to decrease house loan interest rate. A short tenor reduces the interest expense, improving the opportunity for savings. This choice can, however, result in higher EMI costs.
In this regard, a home loan interest rate calculator can be used to determine the variation in repayment for a particular duration. Based on the results, borrowers can assess their financial capacity for repayment.
Tip 3: Opting for a higher downpayment
A higher downpayment will lower the remaining balance of a mortgage and might be helpful in lowering housing loan rates. This is because a large downpayment means that a lender has to disburse a lower amount of funds; thus, it becomes less risky for the lender.
Tip 4: Making prepayments
Making prepayments is another effective technique to lower home loan interest rates. This will also gradually improve a borrower’s credibility and eligibility for a loan. Moreover, a borrower’s repayment capacity will be assured in the eyes of a lender by disclosing additional income, which will simplify the house loan application procedure.
Tip 5: Opting for a balance transfer
Choosing a home loan balance transfer is a wise move that will make the payments plan manageable. In addition, existing customers have the option of transferring their unpaid balance to a lender that provides comparatively reasonable terms.
This will enable the borrower to make logical savings from their available funds. However, it is critical to know the refinancing fees lenders impose and some tips for refinancing a home loan that may be useful.
Tip 6: Comparing lenders
There are many options for house loans, as lenders frequently make offers to entice prospective borrowers. So, finding the best terms requires selecting a reputable lender and considerable market research.
Also, many lenders provide customised pre-approved loan offers for their customers. These offers make the application process hassle-free and smooth. Additionally, these are available on various financial products such as loan against property, home loan, etc. Borrowers can check their pre-approved offers by entering a few basic details including name and phone number
Hence, prospective applicants can use these tips to get the lowest home loan interest rate in India. Additionally, they can negotiate with a lender for a competitive interest rate.