Apart from the eligibility criteria and documentation, there are other factors that are associated with your home loan, the interest rate being one of them. Individuals tend to go for lenders who provide the lowest home loan interest rate for obvious reasons. The interest rate on home loans may vary between financial institutions but will always depend on the MCLR.
Loans with higher interest rates can get heavy on your pocket and can also accumulate debts if you do not repay on time. The introduction of MCLR rate has proved to be beneficial for loan consumers as it keeps the interest rates much lower. Thus, it is advisable that you avail homes home loans with a lower rate of interest to avoid debts. Given below are some ways you can avail a home loan at low interest rates.
- Credit Score-
Having a good credit score, preferably 750 and above, will increase the chances of availing a home loan at low interest rates. You can improve your credit score by consolidating your existing debt and paying your dues on time. You can also improve your credit score by clearing your credit card dues, if any.
Your credit score is numerical representation of your financial or credit history. It will also play a crucial part while you avail a credit with lowest home loan interest rates. Your credit history includes any existing missed EMIs or loan defaults. Such scenarios will lower your credit score and lenders will deem you financially risky as a borrower. On the other hand, a good credit score will show you as a financially responsible borrower.
2. High Income-
If you have a regular source of income and have a considerable salary, then there are chances for you to avail a home loan with a lower interest rate. Higher income translates into better repayment capability. Lenders also consider multiple other pointers such as your employment history and stability.
3. Balance Transfer-
A balance transfer facility helps you transfer an existing loan to another lender. If you find a lender who offers lower interest rates on a loan, you can opt for a home loan balance transfer against a specific fee to shift the outstanding to the new lender.
4. Pre-approved Offers-
Some financial institution and NBFCs offer pre-approved loans with their loans. These pre-approved loans can help you in availing a loan with the lowest home loan interest rate you are eligible across the market.
Bajaj Finserv is such an NBFC that offers home loans at attractive interest rates against minimal documentation along with balance transfer facilities, part-payment and foreclosure facilities, online account access, flexible loan tenure and more.
They also provide pre-approved offer that save time by making the process to avail loans easier and simpler. These offers are available on both secured loans like home loans and unsecured loans like business loans and personal loans.
5. Choose Between Fixed and Floating Interest Rates –
Loans come with both fixed and floating rates of interest. Fixed rates are those which remain the same throughout the loan tenure. Floating rates vary with market fluctuations, i.e., with revisions to the MCLR. Fixed rates are generally higher than floating rates. As such, you should consider the current rates and compare it with future forecasts to choose the most suitable rate of interest on you should opt for.
6. Longer Tenure-
A longer tenure will divide the total sum borrowed across a larger number of EMIs and lower each EMI amount. Availing a loan with longer tenure is the basic pointer in a guide to getting better home loan interest rate. However, borrowers should note that longer tenures increase the total cost of loan as the rate of interest is applied for a longer period.
You can also make higher down payments to lower down your interest rates though doing so will require having a substantial sum of funds available in hand. As a borrower, it is advised to opt for lenders who not only provide attractive rates of interest but also additional benefits to help you repay more easily.
