Interest rate is a crucial factor in terms of loans. It might also define the affordability of the loan. Therefore, it is important to choose a lender that offers affordable rates. However, the interest rate is defined by certain factors. Previous repayment history, credit score, and income are the determiners. A high-interest rate causes higher EMIs and increases the overall borrowing burden. On the other hand, the lowest home loan interest rate makes your EMI affordable and cuts down your aggregate interest payout. Hence, borrowers are suggested to negotiate the lowest home loan interest rate with their lender.
But before checking out the factors in detail, let’s check out the tips to lower your home loan interest rate:
Tips to get the lowest home loan interest rate:
Choose shorter tenure for lower interest
When you opt for a home loan, the loan term affects the interest you pay. Longer durations will reduce your monthly instalments; shorter tenures can reduce your overall interest amount. Use a kotak home loan eligibility calculator to compare the interest rate for longer and shorter tenures before you sign up.
Maintain a good credit rating
Your CIBIL score helps lending companies assess your reliability and creditworthiness. Thus, it is essential to maintain a good credit score. This will help them ensure that lending money to you is not risky. A credit score of 700 or higher can help you secure India’s lowest home loan interest rate.
Compare the rates online
Before choosing a home loan solution or specific lender, research the different products comprehensively and compare rates. Use reliable websites to get an insight into the rates and fees charged by lending companies, then assess which housing interest rates are the lowest and make your selection.
Go for a balance transfer
If your present lender charges a higher interest rate, you can transfer the left principal amount to another bank with a low-interest rate.
Negotiate with the lending company
You can get a lower-interest home loan rate if you are good at negotiating. You can use your good financial profile and credit score and negotiate with the lender. You can further negotiate using good relations if you have a bank account there.
Choose a joint home loan
Having your spouse or another person as a co-applicant enhances your eligibility and helps in reducing your loan interest rates. The lender combines income and credit score to assess your eligibility. You have a better scope of securing a lower interest rate on your home loan.
Pay more as a down payment
You can increase the down payment amount to decrease your EMIs considerably. The higher the down payment, the lower your EMIs will be. It further helps you secure a lower interest rate from the lender.
Include proof of your extra income
When negotiating with the lender for a lower home loan interest rate, show them proof of your extra income. It will help them know that you have a consistent inflow of money, and thus, you can pay your EMIs on time. Hence, they will consider your request and reduce your interest rate. Make sure the list of documents for home loans is accurate and complete.
Include your family member as your guarantor
You can ask your friends and family to be your guarantor. It will allow the lender to approach them if you default or delay your payment. However, make sure the guarantor you select has a good credit score.
Never go wrong with your documentation
To get a low-interest rate, make sure your list of documents for a home loan is comprehensive. Do not submit incomplete or false documents, or you may immediately be rejected.
Research rigorously to get the lowest rates
Several lending companies and banks offer loans at different interest rates. Hence, you should thoroughly research and find the lowest rates before filing your home loan application with a bank. Also, ensure the lending company enjoys a good market reputation.
The housing loan interest rates affect your borrowing cost to a great extent. Hence, ensure you have a good credit score and fiscal profile to secure the lowest home loan interest rates. Visit the bank website to check out competitive interest rates online.