Your Guide to Getting a Better Home Loan Interest Rate
For most people applying for Home Loans and paying the EMIs every month means a big cash outflow every month. Therefore, any reduction in the Home Loan interest rate can help you save money. Are you looking to apply for a Home Loan, but are not keen to have your Home Loan EMI bite into your monthly savings? Here is how you can get a lower Home Loan interest rate and reduce your monthly EMI outgo:
- CIBIL Score
The higher your CIBIL score, the lower your Home Loan interest rate, all other things being equal. The best Home Loan interest rates are available to borrowers who have credit scores of 750 or above (out of 900). As your score goes lower, your Home Loan interest rate goes up. If you want to improve your chances of getting a better Home Loan interest rate, you will have to monitor your CIBIL score and make improvements where necessary. Ways to improve your credit score include prepaying or paying off existing loans, paying credit card balances, and rectifying up any errors you discover on your credit report.
- Higher Down Payment
Opt to make a large down payment so that you can go for a lower principal amount when applying for a Home Loan. Lenders calculate your Home Loan interest based on the principal amount. Therefore, the smaller your principal amount, the lower the Home Loan interest rate and lesser the Home Loan EMI. As a general rule, you will need to pay a minimum of 20% of the purchase price of your home as down payment in order to get better Home Loan interest rates.
- Opt for a Longer Tenure
Are you looking to opt for a Home Loan with a long tenure? Since your principal amount and Home Loan interest rate is divided over a greater number of months, you will end up with a smaller EMI outflow. However, at the same times, you will be required to pay the Home Loan EMI and interest for a longer period. Thus, you could be paying more interest over the entire duration of the Home Loan.
- Negotiate with the Lender
There are times when you can actually ask a lender for a lower Home Loan interest rate. You can do it if you are an old customer and have been in good standing with the lender. If you have been making your loan repayments with the lender on time, your lender might consider offering you a better Home Loan interest rate.
- Ensure Employment Stability
Home Loan lenders prefer borrowers who have been in steady employment for at least two consecutive years. If you have been unemployed for long or switch jobs often, it would not bode well for your Home Loan interest rate. A pattern of declining income will also not fetch you a lower Home Loan interest rate.
Bajaj Finserv offers Home Loans with a variety of financial benefits. As a borrower, you get a low interest rate Home Loan and three EMI holiday (valid for a limited period), and online application process and loan account access. To know more about a Home Loan from Bajaj Finserv.