Despite the rising interest rates due to RBI’s decision to increase the repo rate to 5.9%, home loan in India has experienced driven growth. Presently, most of the urban population depends on housing finance to fulfil their dream of purchasing their own properties. However, irrespective of the current scenario, one can avail of a competitive interest rate against housing credit by considering some vital aspects.
Top ideas to secure the lowest home loan interest rates
Here are some of the top ideas to secure the lowest home loan interest rates possible-
Tip 1: Opt for a shorter tenor
A home loan is a long-term financial commitment, as many financial institutions offer repayment tenors of up to 20 years or more. However, to choose a suitable tenor first, it is important to understand how interest rate is related to repayment tenor.
In the long tenor, borrowers pay more interest rates while putting less pressure to make monthly payments. On the other hand, the interest rate gets reduced drastically in the case of a short tenor. Therefore before applying for a home loan, one must choose the tenor carefully.
Tip 2: Meet the eligibility parameters.
To secure the lowest home loan interest rate, a borrower needs to meet all the eligibility parameters set by a lender. Therefore, one can negotiate with the lender and get a better deal by meeting the eligibility parameters. These parameters include monthly income, credit score, age and others. Home loan eligibility parameters are lender specific, so ensure to check all of them in advance.
Tip 3: Make regular prepayments
It is one of the most effective ways to lower the interest on a home loan. The advantages of lowering the total amount of interest paid will be significantly greater if a substantial amount is repaid regularly. When applicants use their work bonus, salary hike, etc., to make prepayments, the principal amount gets repaid fast. As a result, it reduces a home loan’s overall interest burden and EMIs.
Tip 4: Compare interest rates offered by various financial institutions
Comparing lenders is a good habit to avail the lowest interest rate on a home loan in India. There are multiple financial lenders in the market, so conducting thorough research on loan product interest rates can help make an informed decision.
In such a case, potential borrowers can take help from several third-party websites. They provide a better understanding of the rates and other costs imposed by various lenders.
- Pay more as a down payment
Availing a home loan means potential borrowers have to make a down payment. In such a case, if one downpays a substantial amount, it reduces the total debt. The majority of financial institutions finance nearly 75% to 90% of the total value of the property. However, if one contributes more as a down payment, the loan principle amount decreases, reducing the total interest paid.
- Opt for a balance transfer
Opting for a balance transfer can help reduce a home loan’s interest rate. If an existing borrower is unhappy with the current interest rate, opting for a balance transfer is always an ideal option. Through this facility, customers get the opportunity to refinance their existing housing credit and avail a better interest rate.
However, if payments are missed, higher interest rates are possible on balance transfer-based loans. Hence, one needs to consider everything before making an informed decision and ensure a hassle-free repayment procedure. In addition, potential borrowers must also be aware of how to apply for a home loan online for a hassle-free borrowing experience. Individuals need to simply visit the website of the home loan provider. Then they can submit the application electronically.
Besides offering access to the housing loan application process online, reputed lenders also extend pre-approved offers. These offers are available for financial products like home loans, loans against property, etc. Individuals can check their pre-approved offers by providing requisite details, such as their names and contact numbers. These offers can help streamline the loan application process. Availing of a home loan in India is not a hassle anymore. However, before doing so, one must consider the following ideas to make financial decisions and improve the borrowing experience.