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Low-Interest Rate Home Loan_WC

5 min 04 Jan 2024

Highlights:

Overview of Home Loan Interest Rate
Effective Tips to Avail of a Low-Interest Rate Home Loan

Home Loans are substantial loans that often last for several years. Therefore, it is important for borrowers to seek out manageable loans.
One of the most effective ways to ensure that your Home Loan is within your means is to avail of the lowest Home Loan interest rates possible.

The interest rate is a key factor that determines the feasibility of your loan. In this article, we discuss some effective ways to reduce your Home Loan interest rate.

Simple Tips on How to Avail of a Low-Interest Rate Home Loan

Research Options

Researching loan options and talking with different lenders allows borrowers to compare interest rates, fees, and terms offered by each institution. Additionally, understanding lender requirements and market trends helps borrowers prepare stronger loan applications, improving their chances of receiving competitive offers. This will not only give you an idea of the kind of interest rate you can get but also arm you with more information and better negotiating power.

Maintain an Excellent Credit Score

Once you have made a Home Loan application, the first thing that your lender will do to check your eligibility and creditworthiness. They do so by assessing your credit report. Your credit score, which is a 3-digit number indicating your creditworthiness, plays a key role in determining your credit repayment behaviour. The higher your credit score, the better your chances of availing of a Home Loan at low interest rates. Ideally, if you want a Home Loan at low interest rates and favourable terms, you should maintain a credit score of 750 plus.

Make Prepayments When Possible

When you make prepayments, you do not directly reduce the Home Loan interest rate but you reduce the overall effective interest rate by lowering the total interest outgo. Individual borrowers who have a floating interest rate Home Loan can make prepayments at any time without paying any penalty.

Opt for a Home Loan Balance Transfer

Home Loan Balance Transfer refers to the process of transferring one's Home Loan from one lender to another in return for better interest rates and other facilities.

If your current lender is charging a high interest rate on your Home Loan, you can benefit from a Home Loan Balance Transfer. Borrowers should opt for a Home Loan Balance Transfer after proper cost analysis as this facility involves a Home Loan Balance Transfer fee. Thus, one must opt for a Home Loan Balance Transfer only when the savings made through a low-interest rate are higher than the Home Loan Balance Transfer fee involved. Ideally, a Home Loan Balance Transfer makes sense during the initial years of loan repayment when the interest component of the loan is still very high.

*Terms and conditions apply.

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