Owning a home is one of the biggest financial accomplishments in a person’s life. This is the reason why a number of people apply for a home loan to fulfil their dream. In this regard, prospective borrowers are looking for ways to obtain their required funds while getting the best deals. In this article, we are going to talk about the best ways to reduce the home loan interest rates and increase the affordability of this secured credit. Continue reading to know more about the same.
Tips to lower home loan interest rates
People should be aware that interest rates on house loans tend to vary from lender to lender. A lending institution ideally evaluates the loan amount requested and a borrower’s credibility before setting an interest rate. Hence, it is advisable to choose a lender that best suits one’s needs and financial capabilities.
However, here are some of the effective tips to reduce the home loan interest rates:
Tip 1: Compare lending institutions and fees
There are several lending institutions in the Indian market that offers lucrative benefits to its customers. These benefits usually vary from lender to lender.
Before submitting an application, one can compare the lenders and their home loan interest rates in this regard. One should choose a financial institution that offers home loan at reasonable repayment terms. A potential borrower should also ask a lender about any fees or charges associated with the loan. In this manner people can quickly determine their ability to make repayments and take the appropriate action accordingly.
Tip 2: Improve credibility
The interest rate of a house loan depends on several variables including credit score and repayment history. Financial institutions examine a borrower’s reliability by looking at their credit record. People with a 750+ CIBIL score and a solid repayment record are likely to receive better terms. Such applicants can persuade a lender to charge an affordable interest rate for a house loan. Making timely payments, paying off past due balances, avoiding repeated loan inquiries, etc., can all considerably raise credit score.
Tip 3: Opt for a home loan balance transfer
A house loan balance transfer is a prudent move to make the repayment plan manageable. Existing customers have the option of transferring their unpaid balance to a lender that provides reasonable terms. This will enable the borrower to make sensible savings from their available funds. It is critical to be aware of the fees that lenders impose for refinancing. Further, one can also opt for a top up on home loan in case he or she requires additional funds to cover the overhead expenses.
Tip 4: Choose a shorter repayment tenor
Choosing the maximum tenor for home loan affects the interest rates as well. A short tenor lowers the interest expense, improving the opportunity for savings. This choice can, however, result in higher EMI costs. Hence, one should make an informed decision as per his/her financial capability. In this regard, applicants can use a home loan interest calculator to determine the variation in repayment for a certain duration.
Tip 5: Make pre-payments
Making prepayments is another effective technique to lower the interest rate on a home loan. Borrowers can use their income from rent, interest on fixed deposits, investments, bonuses, etc. to make prepayments. This will gradually improve a borrower’s credibility and eligibility for a loan.
That said, willing applicants should also pay attention while choose the type of interest rate to get the best housing loan in India. Usually, lending institutions offer interest rates at fixed and floating rates. In case of a home loan fixed interest rate, interest percentage remain unchanged throughout the repayment tenor. On the other hand, fluctuations in the market affects the interest rates in case of floating interest rates.
There are several leading financial institutions in our country that extend pre-approved offered on secured loans, such as home loans and loan against property. These offers expedite the overall loan approval stage and helps in fast disbursal of the loan. Applicants can check their pre-approved offers by entering few details in the lender’s portal.
By following these above-mentioned tips one can reduce the home loan interest rates. This will help lower the housing loan EMI and allow to manage the monthly expenses in a better way.