Learn the Best Tips to Get the Best Home Loan Interest Rates
Securing the right home loan plan that checks all boxes of convenience, affordability and tenure can be a strenuous and complex process. However, it is a vital financial requirement for most to build or buy their dream house.
Having said that, the foremost thing to look for while obtaining a home loan is interest rate. As such, multiple factors can affect your home loan interest rates. So, keep reading to find out some of the best tips you can apply during your loan-seeking process.
Top 8 Tips to Get the Best Home Loan Interest Rates
There are several things you can ensure from your end to secure attractive interest rates on your home loan plan. Here are the top 8 tips that you can follow:
Compare Offers between Lenders
The process of securing a home loan may seem hectic, but with the proper research, you can avail the best deal. Therefore, do not rush into purchasing the loan from the first lender you find. Instead, look around and compare lenders to see who offers a better deal.
Nowadays, you will find most of the credible lenders offering loans online. So, you can input the amount you need and check out the available rates. In addition, borrowers can also use the home loan eligibility calculator to know the loan amount and interest rates they can avail.
However, you must also take into account the processing charges, fees and other costs that will affect your overall EMI. Therefore, ensure that the lower interest rates also reduce your overall burden when added up with these additional costs.
Maintain a Healthy Credit Score
Maintaining a healthy credit score can help you in all aspects of securing a home loan. But most importantly, it can fetch you a high loan amount at affordable interest rates. Hence, you must check your credit score once before you opt for one.
In India, a credit score above 700 is generally considered suitable for securing loans. It shows the lender that you are a responsible and credible borrower with a lower risk of default.
You must avoid unnecessary delays in previous loan repayments to increase your score, pay your bills on time, clear outstanding dues, and avoid multiple loan applications. Also, check if there is any error in your credit report that may reduce your credit score.
Save up for the Down Payment
A great way to get a low interest rate and reduce your overall EMI burden is by paying a larger down payment. Although you may think a sizable down payment is more of a hassle, it can reduce your financial liabilities in the long run.
Lenders tend to offer a lower interest rate to those paying a higher down payment. Generally, the reduction in the interest rates is decided following a certain percentage. For instance, if you pay a sizable down payment, then the loan amount will also decrease, thereby reducing the interest rates. Moreover, the loan provider will favour those with a need for low financing over those seeking a considerable loan amount. Finally, it builds more reliability, which helps to get lowerhome loan interest rates.
Select the Property or Home Carefully
The interest rates of your home loan can depend widely on the type of property you wish to buy. When the property itself is the problem, the lender may decide not to approve the loan. Many lenders have a blacklist of homes and locations where they do not provide loans.
Therefore, before you make a decision, ask your lender if this potential home will be financed. You could have to choose the next best lender if the property is on the “negative list,” or you might have to make adjustments to your property selection so that it complies with the requirements of the lender with the cheapest rates.
Reduce Your Debt-To-Income Ratio
Debt-to-Income is a measurement of how much of your income is going toward paying off your debt. Lenders will view you more favourably the lower your debt-to-income ratio. As a result, they are more likely to give you a reduced interest rate because you pose a lower risk to them. Therefore, paying down high-interest debt, such as credit card debt, auto loans, or student loans, might be an excellent strategy to lower your home loan’s interest rate.
Lenders also take into account other variables when determining interest rates. However, paying off your debts is a smart place to start if you want to get the best rate.
Maintain A Stable Income and Job
When determining eligibility for a house loan, lenders take a borrower’s income and employment stability into account. Therefore, those who have a continuous income source and a steady job have a better chance of receiving a house loan with reduced interest rates. Therefore, you must ensure to have a stable job for at least two consecutive years instead of frequently switching. Moreover, make sure that your source of income is credible.
Home loans might be difficult, but with the appropriate planning and information, you can receive the best interest rate and be well on your way to becoming a homeowner. You can save money in the long run by securing the best home loan interest rates. Keeping a few helpful ideas in mind can be effective in obtaining affordable rates. Therefore, if you plan to buy a house soon, you must start comparing different lenders and offers immediately.