Purchasing your dream home can mean different things to different individuals. On one hand, it could be an emotional investment for some people, and on the other hand, it may represent going up the success ladder for others. But a thing that continues to be constant is that it is a long-standing financial commitment. To make the home-buying process more seamless, you can apply for a home loan online and unlock the door to your happiness. However, if you are always hesitant because of the high-interest rates levied on home loans, this guide is for you. Keep reading to learn how to bring down your home loan rates and pay off the loan easily.
But first things first, you must always try to keep in mind that the loan must be borrowed from a reputed lender.
Why Should You Borrow a Home Loan from a Reliable Lender?
At any reliable lending institution, representatives work hard to fulfill your desire of owning your dream home. Therefore, they bring you a wide range of home loan products with a host of benefits, such as:
- Affordable home loan interest rates
- Simplified documentation process
- Balance transfer option
- Transparent home loan processing
- No hidden fees
- Doorstep service
These may not be applicable for the ones that are new or that have bad reviews. Now, let us look at the factors that affect the home loan interest rate so that you are able to get yourself the best deal.
Factors that Influence Your Home Loan Rates
Here are the five primary factors that lenders check when deciding your home loan interest rates.
#1 Credit Score
As you may be aware, your credit score and credit history reflect your creditworthiness to the lending institution and helps judge if you’ve been a responsible borrower. Hence, a decent credit score can be a surefire way to help you secure relatively lower home loan rates. Why? It gives you an opportunity to negotiate with the lender on the basis of your creditworthiness.
So, before applying for a home loan online, make sure you have a high credit score by making prompt loan repayments and keeping an eye on your other outstanding debts. You can also find other simple yet effective methods to improve your credit score. For instance, you can try and aim to achieve 30% credit utilization or a percentage below that.
#2 Locations and Current Market Value of the Property
Another essential factor that plays a crucial role in determining home loan interest rates is the value and location of your property. If the home is situated in a low-profile neighborhood or boasts poor construction besides meager amenities, its resale value would be lower naturally. Your chosen lending institution, consequently, may also charge significantly high home loan interest rates.
#3 Home Loan Applicant’s Job Security
A stable job with a consistent income can work wonders when it comes to your home loan approval. A borrower with unstable income is typically marked as a high-risk home loan candidate. So, if you are a doctor, government employee, chartered accountant, salaried professional, etc., you can get relatively lower interest rates on your housing loan. If you are a salaried professional, make sure you are not switching jobs too frequently when you have made up your mind to apply for a home loan in India. Lenders do not take that as a good thing.
#4 Type of Home Loan Interest
As a housing loan borrower, you must have come across terms like fixed, mixed, and floating interest home loan rates. As the names suggest, fixed ones remain constant all through the loan tenor, and floating rates fluctuate per the market changes. Mixed home loan interest rates stay consistent for a certain period and then switch to a floating housing loan interest rate. Since fixed and mixed interest rates are considered riskier, lending institutions may charge a higher home loan interest rate on them.
#5 Home Loan Tenors and Amount
Last but not least, a shorter loan tenor is more likely to get you a lower rate of home loan interest while a longer home loan tenor is likely to attract a higher interest rate. However, this is not always true and depends on several factors associated with a home loan.
Besides, your home loan amount can impact the home loan interest rates as some lenders also charge a higher interest rate on a high amount as it implies a considerable risk to the lender. So, paying a large home loan down payment is a wise way to lower the home loan rates. One of the best ways to go about with the down payment is to start saving up money when you start thinking of availing a home loan. While you research your options and lenders, and eventually start the application process, you will have substantial savings.
If you are seeking a housing loan in India to purchase your dream home, home extension, or home improvement, partner with a reliable lender. There are several smart tools available online and for free. For instance, you can try using a housing loan EMI calculator to have an idea of the EMI outgo.
Besides, remember that a reputed lender will offer you a complete new range of offerings and a hassle-free home loan borrowing process. So, what are you thinking about? Visit the official website of your chosen lender and apply for a home loan online right away!