Owing to the reduction of policy rates by the apex bank, financial institutions are now offering housing loans at an attractive interest rate. Since home loans are high volume financial obligations spanning over a longer tenor, a small movement in the interest rate can make a significant difference in the total loan outstanding.
Therefore, individuals must know how they can secure even lower home loan interest rates as it will help them to lower their total burden further.
How to get a low home loan interest rate?
Follow these strategies mentioned below to get a reduced borrowing rate:
- Keeping own contribution higher
The average loan-to-value ratio in the case of a housing loan is up to 90%. It means lending institutions will provide 90% of a property’s value as credit. Borrowers need to arrange the rest of the fund themselves.
Therefore, borrowers can make a substantial down payment to lower their loan burden significantly. Since it will reduce their principal loan amount and subsequently the risk factor for lenders, borrowers can secure a more competitive home loan interest rate.
Additionally, prospective borrowers can use a home loan EMI calculator to understand how a reduction in loan interest rate can affect their total financial burden.
- Maintain a strong credit profile
The credit profile of an individual refers to the credit score and repayment history, and they establish the creditworthiness. Moreover, financial institutions refer to it to determine the eligibility of a borrower.
Besides, these details also play a part in determining the interest rate on a home loan. Borrowers with a high credit score and clean repayment history are considered reliable borrowers, and they can negotiate to secure competitive home loan rates.
- Switching lending institutions
Switching lending institutions is an effective way to reduce the interest rate of home loans. For this, individuals need to choose a lender offering a home loan balance transfer at a lower interest rate. This lower interest rate will enable them to reduce their EMIs and the total loan burden.
Individuals can choose this facility at any time during their tenor. However, it is ideal to opt for this facility in the initial phase of a home loan when a substantial interest payment is due. So, individuals must know when they should opt for a home loan balance transfer for getting the maximum benefit.
- Applying for the credit advance with a co-borrower
Having a co-applicant in a home loan gives a borrower several advantages. One such advantage is servicing a home loan at a lower interest rate. Since lenders get the added security of a co-borrower, they may consider extending a loan at a comparatively low interest rate.
Utilising these strategies, borrowers can get their home loans at a significantly lower interest rate and reduce their borrowing costs.
Additionally, prospective borrowers can take the assistance of a home loan interest rate calculator to know their monthly obligations and total borrowing cost. The loan amortisation schedule offered by this financial tool also plays a part in helping borrowers to plan their repayment better.
Besides access to such online devices, leading financiers extend pre-approved offers that streamline the loan application process and save time. Such offers are applicable on financial products like home loans, LAPs, etc. Borrowers only need to enter their names and contact information to check their pre-approved offers.
To conclude, a lower home loan interest rate lets individuals repay their debt comfortably. In this regard, prospective borrowers can refer to the strategies mentioned above to reduce the applicable housing loan rates and pave the way for an affordable borrowing experience.