The Importance of Interest Rates on Your Housing Finance


Are you looking forward to purchasing your dream home? It’s very obvious shopping for your home would be an exciting, yet exhausting job as you have to identify the home, good home finance and the interest rates lenders offer you. It’s the crux of your home loan. Interest rates are like a double-edged sword. While reducing rates are bad for lenders it’s good news for borrowers. An increase will be vice versa.
While availing your home loan there is a number of factors that are taken into consideration. However, your house loan interest rates form the crux of your loan. The loan amount you choose, your occupation, the salary, credit score are some of the important factors to decide your interest rates.
Loan Amount decides the interest your pay. The more amount you take, lesser would be your interest rate.
Salary: It is again one of the deciding factors for lenders to offer you a particular interest rate, higher your salary, better job stability, lower would be interest rates.
Type of Borrowers: Concessional house loan interest rates are offered to certain borrowers like women borrowers, joint home applicants enjoy a lower rate of interest compared to other, under different schemes.
So, here are some key features on how to get lower home loan interest rates and reduce monthly EMI outgo:

CIBIL Score
The credit score is one of the most important parameters to adjudge interest rates. Exceptionally good credit score will help you in a commanding position to negotiate on the interest rates. Home loans are easily available to lenders who have a credit score of around 750 or above (under 900). Experts say before you plan to apply for home loan, check your score, try to improve or maintain it at least 5-6 months prior to your application. A consistency will help easily get loan approvals.

Higher Down Payment
Ideally, lenders will finance around 80-85% of your property. However, if you're willing to make more margin money payments then lenders will consider dropping down your house loan interest rates.  So, smaller the principal amount you apply for lesser would be interest rate and low would be your home loan EMI

Negotiate
Other than credit score, good and stable income source, additional income source like spouse/parents/siblings, age, property with a higher value in near future, will help you negotiate for low housing loan interest rates. If you already hold a good relationship with one of the lenders, you can negotiate for better deals.

Job Stability
Housing loan Lenders prefer borrowers who can build more confidence in them about loan repayments. Therefore, they prefer borrower who has been steady in their jobs for at least two consecutive years. If you have keeping switching jobs or have been unemployed for a longer time it will not help you crack a good housing loan interest rate deal.

Women Applicants
Many leading private companies and banks consider women as responsible borrowers. Therefore, they give a concession of around 0.05% to 0.15% on their existing house loan interest rates. So, if you apply for loan with your spouse as joint home loan application you're able to get some discount on the rates. After all ‘A penny saved is a penny earned’. Even a small reduction can help you save thousands in the long run.


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