Owning a house is a dream shared by many individuals. However, the real estate prices in India make it difficult for one to make a property purchase by simply relying on their savings. This is why most people take the help of home loans in order to get the finances required. Now, while applying for a home loan, applicants keep a close eye on the home loan interest rate being offered. This is because getting a good rate is vital for the monthly instalments of the loan in being affordable. There have been cases where borrowers have struggled with repaying their loans because of high interest rates. Being unable to repay the loan can have a negative impact on your credit score. To avoid this from happening, you need to make sure that the lender offers a competitive housing loan interest rate.
Take a look at a few ways in which you can effectively bring down the interest rate of your home loan:
- Choose a short repayment tenure
Most borrowers prefer to opt for the longest tenure that the lender offers for repaying the home loan. The reason for this is so that paying the monthly instalments becomes easier. With a long repayment tenure, the loan’s EMIs would be smaller as compared to a short tenure. However, do keep in mind that the interest keeps getting added with each instalment. This is why choosing a shorter repayment tenure and paying off the loan in a fewer number of instalments can help in saving interest.
- Maintain a good credit record
Any financial institution is going to evaluate an applicant’s credit record before offering them a loan. Since a home loan usually involves a huge amount, you need to be very careful about maintaining a decent credit score. It is advisable to have a credit score of 750 or more when you apply for home loan. Since lenders prefer applicants with a good credit record, they can even offer a lower home loan interest rate to attract such customers.
- Apply for a joint home loan
One effective way of getting a good deal on a home loan is to have a co-borrower. The lesser the risk for a lender, the better the deal you can get. If a lender sees not one but two co-borrowers who are actively earning individuals, they are assured that the double income will make the EMI repayment easier. This is why they can offer a lower home loan interest rate.
- Refinance your home loan
If you have already taken a home loan but now find a better deal, opting for a home loan balance transfer might be a good idea. Many borrowers transfer their home loans in order to get a reduction in the interest rate offered by the new lender.
So, these are a few tips that you should keep in mind to get a low interest rate on your home loan. To understand whether the interest rate being offered is an affordable option, you can make use of a home loan EMI calculator.