Purchasing a home is a significant milestone for most individuals. By securing a low-interest housing loan, one can make homeownership a more affordable process. Even the smallest reduction in the interest rate can lead to significant savings. However, many people are unaware of how they can secure a low-interest loan.
If you are in the process of applying for a home loan and want to make the most of low-interest options, check these eight points. These practical tips will allow you to avail of loans at a better rate and save as much as possible.
1. Choose Right Lenders for Your Housing Loan
Different financial institutions and banks offer different interest rates or terms. Comparing mortgage loan lenders is essential, so you can get the best possible offer. The comparison can be between banks, housing finance companies, and non-banking finance companies. You can even use online comparison tools to find the best home loan lenders.
2. Shorter Loan Tenure
Most individuals, while applying for a housing loan, opt for the longest possible repayment tenure. Even though this reduces your monthly EMI, this can increase the percentage of interest paid on the amount. This is why opting for shorter tenure is an ideal way to get competitive home loan interest rates.
3. Higher Down Payment
Whenever one gets a home loan, they have to pay a certain amount of down payment. This is because lenders generally pay up to 80% to 90% of the property value. However, they require the rest to be paid in advance by the borrower. If you increase the amount of down payment, you can easily lower your EMI and the interest rate.
4. Stable Income & Employment
Assuring your repayment capacity to the lender is essential while applying for a mortgage loan. To do so, maintaining a stable job and steady source of income is the right step. Individuals with secure jobs from reputed organizations can enjoy better housing loan eligibility. It is also an ideal way to lower the interest rate.
5. Negotiate With Lenders
Applying for a housing loan in your existing bank is the best option to retain the power of negotiation. When you have a strong financial profile or a good relationship with the bank, you can negotiate and attain lower interest rates. Banks are usually willing to provide preferential rates to their long-term customers, saving them from home loan comparison.
6. Floating Interest Rates
A Home loan usually comes with fixed or floating interest rates. Fixed rates remain constant throughout the loan tenure while floating rates fluctuate. These rates can be flexible based on the market condition. If you wish to enjoy better mortgage interest rates, opting for a fixed rate is a good idea. These rates are lower than the fixed ones and can be beneficial in the long run.
7. Special Offers & Schemes On Housing Loan
Even though it is hard to believe, lenders can also provide special offers and discounts on interest rates. Most banks provide promotional offers on various occasions for mortgage loan options. Besides, there are many government schemes that you can find with public and private sector banks.
8. Loan Balance Transfer
Even if you have already acquired a housing loan and still find lower interest offers from other lenders, you can utilize the balance transfer option. By transferring your existing loan to a new lender, you can save significantly on the interest rate. But before you begin the process, get all the information regarding fees and other expenses.
With careful planning and financial discipline, anyone can acquire a low-interest home loan. Even if you include a co-applicant with a strong credit profile, the payable interest rate can be reduced.
Additionally, borrowers can consider improving their own creditworthiness and implement the above-given tips to score a better deal. Doing so will allow you to achieve your home ownership goals affordably.