A large number of potential homebuyers across the country rely on home loans to purchase their dream house. The interest rate charged on a housing loan plays a crucial role in determining the overall cost of borrowing. Thus, home loan borrowers usually look for ways to get lowest home loan interest rate. An attractive interest rate would translate to lower EMIs, thereby reducing the repayment burden significantly.
If you are looking forward to availing a housing loan, you can make use of the below-mentioned tips to get a competitive interest rate:
- Consider various options
Various lenders offer home loans at attractive rates and favourable terms. You must consider the rates offered by different lenders before making the final choice.
- Improve your credit score
Your credit score or CIBIL score reflects your repayment capacity and creditworthiness. Lenders may evaluate your credit score before deciding on your home loan eligibility. A decent credit score of 750 or above can make you eligible for a high loan amount at a reasonable interest rate. Thus, you must work towards improving your credit score before applying for a loan. You can boost your credit score by making timely repayment of outstanding dues, decreasing your credit utilization ratio, and having the right credit mix.
- Opt for a short-term loan
The longer your loan tenure, the more you will end up spending towards the interest outgo. Thus, you can opt for a short-term loan to save on the total interest outgo. You can make use of a home loan EMI calculator to check how much amount you would be saving by opting for a shorter tenure rather than a long-term loan.
- Avail a lower amount
With leading financial institutions, you can avail up to 80% of the property’s value as a loan. However, the higher the loan amount, the higher is the risk the lender has to bear. Consequently, lenders may charge a higher interest rate on high-value housing loans. Therefore, you must try making a larger down payment and avail a lower amount to get a competitive home loan interest rate.
- Apply for a joint home loan
The above-mentioned tips can help you get a competitive interest rate, thereby reducing your monthly EMI outgo. This will make repayment easier and reduce the possibility of a home loan default.