Home loans are secured loans where you can borrow money from banks and financial institutions to purchase your dream home. Lenders allow you to repay this loan in small amounts every month, called the equated monthly instalments (EMI). The amount of EMI you pay depends on your loan amount, tenure and interest rate. Therefore, having the lowest home loan interest rates becomes crucial when you are availing a housing loan. Though the lender decides your interest rates, there are a few tips that can help you get the lowest interest rates on a home loan.
Pro Tips to Get the Lowest Interest Rates on Home Loan
- Apply with a high credit score
You must maintain a high credit score before you apply for a home loan. The credit score reflects your creditworthiness and repayment capacity. You must have a credit score of 700 and above to get a low home loan interest rate. Before availing a loan, obtain your credit report and check your credit score. If you find any discrepancies in the credit report, you must ask the credit bureau to rectify them.
- Opt for a joint home loan
Many lenders offer concessional interest rates for women. Therefore, you can avail a loan with your partner or mother to get low interest rates. Also, to get the lowest interest rates, you can enhance your eligibility by adding additional income, maintaining a stable job profile and keeping a low debt to income ratio.
- Pick the best lender
The lender you choose has a significant effect on your interest rates. You must avail a home loan with a lender that offers competitive interest rates. It is best to compare lenders based on their interest rates. However, with the interest rates, you must also check their processing and other fees. You must not avail a home loan with a lender that has lower interest rates but higher fees.
- Switch your loan
Transferring your loan can help you save on your interest outgo. If you find another lender that is offering a home loan at lower interest rates, you can switch your loan. With a balance transfer, get better deals when you have a substantial tenure remaining. However, do a cost-benefit analysis to ensure that your savings are more than the cost of the transfer.
- Higher down payment
When you pay a higher down payment, it’s an assurance for the lender that you have funds to pay the loan. Similarly, it also reduces the loan amount, automatically reducing the interest outgo. Therefore, always pay a higher down payment on your home loan.
Many factors like your income, eligibility, loan amount, property value, etc., determine your interest rates. Therefore, it is necessary that while availing your loan, you adopt a holistic approach to get the lowest interest rates. Ensure that you have high home loan eligibility and maintain a high credit score. Use these tips to get the lowest home loan interest rate and buy your dream house today.