Not many can afford to buy houses solely through their savings. Property rates are quite expensive, and most people looking to buy houses rely on home loans for financial support. Since a home loan mostly involves a big amount, it is usually repaid over a long period of time. However, it is also important to keep the loan’s interest rate in mind, which increases the total cost of the loan.
Many borrowers have struggled with repayment simply because they got stuck with a high interest rate. But this does not mean that taking a housing loan is a bad idea. All you need to do is keep the following in mind to get an affordable home loan interest rate from a lender:
- Maintain a good credit score
A credit score is vital for any kind of loan that you apply for. All lenders review their applicants’ credit records before providing loans. This is because doing so gives them a fair idea of the repayment capacity of the applicant. You should always aim to maintain a good credit score (above 750). A decent record will not just get you the loan approval, but also a better deal! Lenders always look to offer loans to borrowers that have great CIBIL scores, which is why it is quite possible for them to offer lower interest rates on housing loans.
- Opt for a short repayment tenure
Most borrowers prefer going for long-term repayment tenures for their home loans. This is because they find it easier to pay the monthly instalments of the loan in smaller amounts. However, since the interest of the loan is added with each instalment, they end up paying a large amount. To save money on the interest, try to opt for a short repayment tenure. Sure, the monthly instalments will be higher, but if the goal is to cut down the total cost of the housing loan, repaying it faster is a very effective method.
- Transfer the home loan balance
It is quite possible that you already have a loan and now find a lender offering a better housing loan interest rate. In this case, there is always the option of going for a home loan balance transfer. This means that the existing loan amount will get transferred to a new lender, and the repayment will be continued with the revised interest rate.
- Make a smart choice between floating and fixed interest rates
Usually, a floating interest rate is lower than a fixed interest rate. If you are opting for a long tenure, it might be better to choose a fixed home loan rate since market rates might go up in the future. However, if the plan is to clear the loan within a short tenure, going for a floating interest rate could be beneficial as you can get a lower interest rate to begin with.
Lastly, before you apply for home loan, consider numerous loan plans. This is because a loan’s interest rate is not the only thing you need to focus on. Check whether the lender is offering the required loan amount and suitable repayment options too.