Many people find it difficult to purchase a home due to high rates of interest. Finding your dream home can be troublesome in case you do not have enough money to make an upfront payment. The Interest rate on your home loan can influence the total cost of your home.
Therefore, home loans are designed at lowest interest rates. Home loan interest rate is the percentage of the principal amount charged by the lender to the borrower. In this post, we will know about the lowest home loan interest rate.
So let’s get started.
How to get Low Interest Rate on Home Loan?
Repaying a home loan can be burdensome, but with low interest rates it becomes easy breezy to repay the loan. You can find multiple ways to lower the interest rate on home loans. There are some strategies to know about getting a low interest rate on your home loan. These include
Comparing home loan interest rates
It is extremely important to compare the home loan interest rate. Buying a home or constructing a property is a long term investment and therefore comparing interest rates by various financial institutions is vital.
Keeping the loan tenure short
Home loan tenure is one of the important steps to determine how much interest you would pay on your home loan amount. Before you apply for a home loan you need to select the loan tenure carefully so you don’t end up paying too much against your home loan.
Maintaining a good credit score
When you apply for a home loan your credit score plays a vital role in buying property or house. If you have a good credit score your loan approval will be more convenient and you can get a home loan at lower interest rates.
Making large down payments
Your down payment size can have a significant impact on the interest rate of your home loan. Making large down payments can result in a lower interest rate. It can also help build equity much faster.
Considering home loan balance transfer
Home loan balance transfer is the process of transferring your home loan to another lender. Thus,if another lender offers you lower interest rates then you can transfer your loan to that other lender and avail a lower rate of interest.
Factors That Helps to Reduce Interest Rate on Home Loan
Here are some factors that will help you in availing a home loan with reduced interest rate. These factors include the following.
Your credit history is the most important factor to reduce interest rates on your home loan. The higher your CIBIL score, the lower your home loan interest rates would be. Hence,a good credit score implies lower risk.
The Valuation of your Home
This factor plays an important role in determining the value of your home. For example, a house with good amenities such as a shopping center, banks, grocery store, bus stop, hospitals, schools nearby are likely to have more value than one with no amenities or connectivity.
Your job profile plays an essential role in the loan application process. Having job stability and regular income helps you in lowering the risk burden of your home loans. So, if you are a salaried professional, government employee, etc. you can get lower interest rates on housing loans.
Interest Rate Type
The type of interest rate affects how much you pay interest on a home loan such as a fixed interest rate, floating interest rate. The fixed interest rate is always a little higher. On the other hand, floating rate changes with respect to the market conditions. Therefore, you may enjoy reduction in interest rates of home loans in favorable circumstances.
Buying a home is a dream for most people. Therefore, home loans are an essential part when you want to own a house. Reducing interest rates can be helpful in saving money, which can be put to other use. Therefore, you can consider several strategies and factors such as choosing a loan with lower interest rates. Furthermore, you can find the best option to reduce your home loan interest burden.