Home loans have gained popularity recently because of their low interest rates and easy accessibility. However, the principal amount in such loans can be high, which also raises the interest amount. Additionally, the long tenure of such loans requires the borrowers to pay a large amount as interest every month in EMIs. This article shall try to provide a detailed guide regarding how to pay the lowest home loan interest rate in India.
Factors determining home loan interest rates
Various factors are considered while setting and determining home loan interest rates across financial institutions. These are listed below.
- Credit score: A borrower’s credit score is a major factor in a home loan. Borrowers who have properly repaid every EMI and loan will be able to secure higher scores and lower interest rates.
- Monthly income: Lenders often analyse the monthly income to determine the financial capability of a borrower in returning the loan amount. Individuals with higher monthly incomes are likely to have lower interest rates.
- Age factor: The borrowers should be at least 21 years old while taking a home loan. Moreover, the age cannot exceed 65 years by the final EMI payment date. It is another important factor in determining the interest rate and amount.
- Property location: Another important factor in this regard is the location of the chosen house or property.
Tips for getting the lowest home loan interest rates in India
Borrowers often consider ways to help them ensure the lowest home loan rates before applying for home loan. Multiple factors can be important in this regard. The following tips can help them get lower interest rates with housing loans:
Maintain a strong credit score
Credit bureaus like TransUnion CIBIL are responsible for compiling credit scores and preparing credit reports for Indian citizens. They issue this score to every citizen annually based on their credit history and records. It ranges between 300 and 900. If a borrower pays EMIs on time, he/she can get better interest rates. Lenders agree to offer loans at lower interest to borrowers with a high credit score, as it signifies that they are serious with their payments.
Ensure impressive financial records
Financial institutions check applicants’ monthly income and financial records, checking their income certificate, pay slip, fixed deposits, stocks, mutual funds and income tax returns. It is the net income factoring in all deductions. The threshold is about Rs.20,000. However, if applicants have an annual income higher than this threshold, their chances of receiving a home loan increase. Moreover, they might also offer lower home loan interest rates keeping the income in mind.
Maintain the age bar
While the approved age bar for applying for a home loan is till 65 years, it is advisable to apply at a younger age. As lenders consider the capability of the borrowers to repay the loan on time, they are less likely to consider people at an older age. Moreover, it is easier for young people to get such loans, since home loans come with high EMIs and long tenures. This is why borrowers should know some ways to reduce their home loan tenor and EMI when planning to take a large credit amount.
Choose proper location
As home loans are based on submitted collateral, lenders prefer such properties with high resale value. Therefore, if borrowers choose houses in urban areas with modern-era connectivity and amenities, lenders will likely be more interested in financing these. As a result, the interest rates can be relatively lower. On the other hand, houses in extremely rural areas will have lower resale value, so the interest can increase.
Getting lower home loan interest rates can always benefit borrowers. As this article pointed out, various factors can affect this process. The applicants need to be aware of the current home loan rates before applying. There are several benefits of calculating home loan EMIs in advance. There are also other requirements for getting a home loan, which includes eligibility criteria, credit score and documentation.
A credit check is likewise among one the most things which you want to follow while applying for a home credit. For the people who have a decent FICO rating, it is more straightforward to meet all requirements for the credit while for others it becomes troublesome. Banks significantly offer a lower financing cost on home credits to those borrowers who have a high FICO rating. This implies having a decent credit profile assists in getting a superior home advance with managing from banks.
Leading financial institutions extend such offers for products like home loans and loans against property. Availing such offers will ease the procedure of getting a loan. Borrowers planning to take home loans can also check their pre-approved offers from these institutions by submitting their names and contact details.
As this article pointed out, reducing the interest rate can help a borrower pay less money while repaying a home loan. However, finding the lowest home loan interest rate in India will not be easy. Therefore, maintaining the factors mentioned in this article can be beneficial here.