While getting a home loan is relatively easy in today’s age of technology, finding a lender who offers you a loan at a low home loan interest rate can often be tricky. Although lenders do offer attractive rates, one has to put in extra effort to negotiate suitable borrowing terms.
Overall, your home loan eligibility and financial standing play a big role in deciding the interest rate you are offered, and you should pay close attention to these factors before you apply. Take a look at the below financial tips to avail of the lowest possible home loan interest rate.
Maintain a Good Credit Score
Home loan lenders look for applicants who are a ‘safe’ bet. In line with this, they give loans only after assessing the borrower’s risk profile and financial standing. For instance, borrowers with a credit score closer to the 750 mark get their home loan approved easily because lenders consider them creditworthy. Moreover, those with high scores generally get offered concessional home loan interest rates.
This is why you should try to maintain a CIBIL score of 750 before you apply. If you do not meet this requirement, work toward improving it until you do. You can improve your credit score by paying off any previous debts or any other overdue EMIs, fixing errors in your credit report, or simply maintaining a healthy credit utilisation ratio. Doing so will improve your home loan eligibility, and help you get approved for a lower interest rate.
Put Down a Higher Down Payment
The LTV ratio is a crucial part of the home loan process. Typically, you are required to fund around 15–20% of the home’s value through down payment, but you can always invest more. By doing so, you effectively reduce the loan amount, which in turn lowers the risk incurred by the lender. Borrowing a smaller loan amount translates to good financial responsibility, and the lender may be willing to offer you a lower home loan interest rate as a result.
Negotiate For Better Terms
Maintaining a good financial relationship with your lender will allow you to negotiate for a better home loan interest rate and other features. For this, you need to prove a consistent record of loan repayment, a stable income, and a healthy bank balance.
Lenders even consider other sources of income, such as the rent collected from another property, among others. All of these factors underline your financial stability and help prove your ability to repay the loan in a timely manner. A strong profile ultimately helps you negotiate better for favourable terms.
Consider a Balance Transfer
The balance transfer facility only works if you are already a home loan borrower. If you think your lender is charging you more or if you find a new lender who’s offering you a better home loan interest rate, then it may be wise to consider refinancing. Note that there are charges involved while making a balance transfer. Do a thorough cost-benefit analysis and only go ahead if the interest savings are more than the cost of transfer.
Select a Long Tenor
Some lenders may offer a lower home loan interest rate to borrowers that opt for a long tenor. This is because a home loan is a long-term instrument, and opting for a longer tenor helps keep the EMIs manageable. In the eyes of the lender, comfortable EMIs translate to lower risks, which is why they may offer a better rate. To find the best option for you, use a home loan interest calculator. It shows you the interest payable on the principal amount at the interest rate and tenor you select.
Follow these financial tips and take advantage of sound financial preparation to get the best home loan deal. However, simply getting a low interest rate isn’t enough. You should also get access to a range of loan features. An option that does both is the Bajaj Housing Finance Limited Home Loan.
This instrument offers you an ample sanction and a flexible tenor of up to 30 years, all at an attractive home loan interest rate. It is also easy to avail of as you only have to meet simple criteria and furnish basic documentation. Other notable loan features include the option to avail of a high-value top-up loan while transferring your loan and the facility to apply online and get a sanction letter in minutes. To access all these benefits and more, apply online and get hassle-free approval.