Banks provide home loans to buy a constructed residence, plot, house construction, and refurbishment of existing ones against affordable interest rates, making repayment convenient in easy EMIs (Equated Monthly Instalments). Interest rate is the primary cost of a loan. Home loans are a long-term obligation for salaried individuals and self-employed employees. Therefore, it is vital to determine if they can afford to take a home loan.
Individuals considering current home loan interest rates should know that lenders consider several factors while determining and offering interest rates on home loans to the applicant. It includes the applicant’s income, loan tenure, loan amount, down payment, credit history, location and value of the property, and many others.
Current Mortgage Rates
One of the factors that impact home loan interest rates is the policy rates of the Reserve Bank of India (RBI). Recently the RBI revised the repo rate, which has led many lenders to increase their loan interest rates slightly. Still, home loans are affordable with leading banks. It can be as low as 8.65% for salaried individuals. To check the interest rate applicable loan interest rates, loan seekers can utilise the home loan interest rate calculator and check the offered rates as per their eligibility.
The Repo Rate is the key policy rate of the RBI. It is the interest rate at which the RBI lends money to other banks in India. When the repo rate increases, banks obtain their loan at a higher rate from the RBI, making them charge accordingly from customers.
How To Reduce Home Loan Interest Rates
As mentioned, the customer’s credit profile and several other factors impact home loan interest rates. A few ways that can help loan-seekers to reduce their home
1. Short Home Loan Tenure
Stretching the loan tenure unnecessarily can help to lower loan EMIs, but customers will have to pay more in the long run. Therefore, most prudent customers prefer to apply for a shorter-period loan. A long-term loan increases the default risk for lenders as annual percentage rates of a loan are based on market forces. Therefore, they charge a higher loan rate from customers.
2. Maintain a Good Credit Score
A credit score is one of the biggest factors considered by lenders to determine interest rates. Most banks provide loans to individuals with a good credit score above 650. Banks can provide home loans to individuals having low credit scores also. But the interest rate can be significantly higher than rates offered to individuals with a good credit score. The odds of home loan approval at a lower interest rate are greater for applicants with an excellent credit score and spotless repayment history.
3. Consider Home Loan Balance Transfer
Customers may find that they are paying high for their existing home loans, and they can receive a new home loan at favourable terms from another lender, they can consider a new lender. However, before approaching a new lender, customers can approach their existing lender and request a rate reduction. It may be willing to accommodate the customer.
4. Show Additional Income Source
Income is another important factor in determining home loan interest rates. The applicant’s financial stability helps lenders ensure they get the loan amount back on time. An additional source of income can impress lenders. Individuals can show an additional source of income to increase their chance of getting a home loan at a reduced rate.
5. Take Advantage of Privileged Interest Rates
Lenders offer special interest rates to women. Loan applications can be made with a co-applicant to reduce interest rates. A customer can consider making a home loan application with the spouse.
6. Pay a Significant Down Payment
Lending institutions offer lower interest rates if the applicant makes a significant amount for the down payment, as it will decrease the loan principal amount. Customers may want to save on loan costs at the start of the loan by paying a small amount against the down payment. But considering the long term, it will have a higher interest rate comparatively.
These are ways that can help individuals to get reduced current home loan interest rates.
Thus, plan a home purchase against a loan that can be managed to repay in a timely manner. Loan seekers can compare home loans in Bangalore with major banks in India and purchase their first place at affordable rates. Narrow down the loan choices to get the best home loan.