The buying of a home is one of the biggest decisions that one takes in life. Choosing a home matching your requirements needs proper planning.
Applying for home finance is an efficient way to arrange funds to move into a dream house.
But, before doing that, it becomes vital to consider the EMI amount and the rate of interest.
Banks and NBFCs may provide you best loan offers. But if you plan to repay it over a longer tenor, your housing loan interest rate charges may increase.
It is where it becomes vital to find the best home loan interest rate deal. It is possible to find your way to the lowest home loan interest rate by following a few tips.
Read on and know more!
1. A higher CIBIL score
A strong credit score means that you have paid your earlier and active loan EMIs and credit card outstanding on time. It also denotes that you will pay your upcoming home loan EMIs on time. Having a healthy CIBIL score increases the confidence of lenders’ to get timely repayments. They may reward you by offering a low home loan interest rate. A credit score of 750 or more can help you pocket the most affordable home loan deal in your city.
2. An increased down payment amount
While applying for a home loan, you should pay a higher down payment. The higher it is; the lower the amount will be. In turn, it will lead you to avail of the lowest home loan interest rate.
3. A lower debt to income ratio
A debt to income ratio is the percentage of the debt against your total income. The higher it is; the bad. It is because a higher debt to income ratio signals the borrower that you already have a load. And if you are given the loan approval, you may default. Even if you get the loan approval, it may be at a higher rate. Hence, it becomes vital to keep your debt to income ratio lower. If possible, try to clear some debts so that your debt to income ratio goes down. In turn, you can get the lowest home loan interest rate.
4. A smaller tenor
Generally, a home loan comes with a longer tenor of 20 years and more. A large number of people go for it to manage to pay lower EMIs. But, a longer tenor also means increased home loan interest rate charges. Thus, to enjoy a lower housing loan interest rate, you should go for a shorter tenor. It increases the EMI amount but helps you save huge on interest charges.
5. A stable employment record
If you are a Salaried individual with an employment record of 3 years and more, it means you have a stable job. It also denotes that you can pay the loan EMIs on time and without defaults. In turn, a lender may offer you the lowest home loan interest rate. On the other hand, if your job is unstable, you won’t get the loan approval. Even if you get, the rate of interest would be way higher. If your income level is a bit low, you can also include another source of income. It may convince your lender that you have enough funds to make timely repayments. Thus, you may also get an affordable housing loan interest rate.
Even if you can save a bit on your home loan, it means thousands to lakhs of money. Thus, it should be your goal to implement one of the discussed tips to avail of the lowest home loan interest rate.