Home loans are a substantial financial responsibility and run for a loan time. When applying for a loan, you need to focus on many aspects, the interest rate being crucial.
Lenders have their rates fixed, you cannot change them, but you can make an effort to get the best rate of interest for your loan. A difference of even a single basis point can have a significant impact on the overall cost of your loan and your EMI.
Read on for a guide to getting the best loan rates today.
How to Get The Best Loan Rates?
Below we mention the various methods to help you get the best home loan India rates.
Work On Your Credit Score
The credit score indicates your creditworthiness; banks prefer to lend to applicants with a good credit score and are, therefore, less risky borrowers. A good rating will ensure that you get your loan application approved and will also get you lower housing loan interest rates.
Before you apply for a loan, check your score beforehand. If your score is low, find the reasons for it and work on resolving them. Improving your score, if required, will take a while; it would be a good idea to focus on your score for a few months before applying for a loan.
Keep Your Debt Level Low
Lenders also look at your debt levels when they sanction a loan. The debt-to-income ratio is the proportion of all your EMIs compared to your income.
The lower the ratio, the better, as it shows you can service your EMIs easily and are not a risky borrower. Lenders will be willing to sanction a loan at lower rates.
Pay More Upfront
Banks sanction loans up to a maximum of 75-90 percent of the home value. This depends on the house cost and the lender’s policies.
The amount you pay upfront from your savings is known as the downpayment. If your savings permit, you should try to make a larger downpayment and reduce the loan amount.
A larger downpayment will reduce your overall loan burden and hence, your interest cost. It will also help you in getting a better loan deal.
Many lenders can offer you a home loan if you meet their eligibility criteria. To find the best home loan in India, you will have to research extensively and compare the offers from various lenders.
This will ensure you find the lender who can offer the most competitive loan rates. While interest rates are crucial, do not overlook other aspects.
Income and Job Stability
Lenders also consider income and job stability for sanctioning a loan. If you have a stable job or a source of income in the case of a business, then the prospective lender is assured of your repayment capacity and is likely to sanction a loan at lower rates.
If the organization you work for has a tie-up with a lender, you could get a lower housing loan interest rate.
Things To Keep In Mind When Taking A Loan
The above factors will help you get the best housing loan interest, but other aspects require your attention. Some of them are mentioned below:
- Find out about all costs, whether hidden or obvious, like prepayment penalty, late payment charges, processing, and legal charges.
- Choose the term carefully; a short tenure will lower the loan cost but increase the EMI burden. A longer loan term will reduce your EMI burden but will increase the overall loan cost.
- Read all terms and conditions thoroughly before you sign the loan document.
- Consider buying insurance for the home loan. You could buy an additional term policy or an insurance product bundled with your home loan.
A house loan is a long-term commitment, so it is vital that you choose the right lender who offers you the best rates. The above factors can help you get the best home loan rates; keep them in mind when applying for a loan.