The decision to buy a house using a home loan can be an excellent one. With a simple process, easy eligibility and quick loan disbursal, you no longer need to forego your dream of being a homeowner. But, to make the repayment of the loan as easy, it is best to check out the current home loan interest rates in India.
Did you know that as a salaried individual, you could get loans starting at 6.70% when this article was written in 2022 (rates have changed since), with disbursal in just 5 days?
However, one thing you must remember is that the lowest rates are not always available to all borrowers. Here’s a look at how you can get the lowest possible interest rate.
Pay Higher EMIs
The interest rate affects your EMIs. But it also adds up based on the repayment tenure you choose. So, if you are able to choose a shorter tenure, the interest payments will not add up as much as in a long tenure. However, remember that a shorter tenure might raise the monthly EMI amount.
So, use a home loan EMI calculator, available online, to check out the various combinations of EMI and tenure to see what works best for you.
Check for Prepayment Facility
Not all lenders allow prepayment. There could a penalty fee for paying up your loan ahead of time. So, before applying for the loan, check for facilities such as prepayment, balance transfer, etc. These could help you cut down on interest payments.
Ensure a High Credit Score
When you check your home loan eligibility, also check your credit score. A higher credit score will not only ensure loan approval, you will be viewed as a low-risk borrower.
This is because a high score means that you have a track record of repaying your dues on time. A low-risk borrower is a bank’s dream. They might just offer you the most competitive interest rates as a result.
Pay More As Down Payment
Most lenders finance about 75%-90% of the property value, with the remaining balance being funded by you. If you start planning for the home purchase early and build up your savings, you will be able to build up enough funds for a high down payment, rather than the bare minimum.
This means that you will need a much lower loan amount. This will automatically impact your interest payments.
Revise Your EMI
Many lenders allow you to revise your EMIs annually. In case you switch to a job with a higher pay or inherit capital, you switch to higher EMIs to reduce the tenure of your home loan.
With the tenure being reduced, the interest payments will also substantially come down. Check with your lender for options like these and make sure to read the terms and conditions, along with all charges and fees, before you sign the loan papers.
The best course of action is to start planning as early as possible and invest wisely to build your funds. This will help you financial security later in life.
