A Quick Guide to Securing a Better Interest on Home Loans

Save on Your Home Loan Interest

While the prospect of purchasing a new house always seems exciting, it is imperative to plan your borrowing journey. The interest rate at which you repay your Home Loan is the most important aspect of your repayment process, seeing as it alone can determine how expensive or cost-effective the loan is.

Borrowers should consider doing all that they can to secure a favourable interest rate that will make their Home Loans more feasible and budget-friendly. To ensure this, here is a list of tips that can help you on this front.

Tips for Securing a Better Interest Rate on Home Loan

Maintain a Healthy Credit Score

Borrowers should maintain a healthy credit score to avail of a Home Loan with attractive benefits. A borrower with a credit score of more than 750 is likely to avail of a Home Loan at more competitive interest rates.

Borrowers can check their credit scores online for free. If your credit score is below average, focus on boosting your CIBIL score to enhance the quality of your Home Loan application. 

Additional Read: Top Five Ways to Manage Your Home Loan Burden

Link Your Interest Rate to the Repo Rate

Borrowers also have the choice to link their Home Loan interest rates to an external benchmark, such as the RBI repo rate. The benefit of linking your interest rate to the repo rate is whenever a reduction in the rate is announced, the benefits can get passed on to you directly. 

Make a Bigger Down Payment

It is a good idea to put down a sizeable amount as a down payment if you can afford it. The higher the down payment amount, the lesser you need to borrow from your lender. It translates to lower EMI payouts, and a higher chance of your Home Loan application being approved for a low interest rate, given your financial stability and repayment capacity.  

Negotiate Better Terms

As a borrower with a healthy credit score who fulfils the housing loan eligibility criteria, you also hold some power to negotiate better lending terms, including a competitive interest rate and a longer loan tenor. This is easier for individuals with a credit score of 750 and above. Other factors that make a difference are income, age, and work experience.

Additional Read: Important Factors that Affect Your Home Loan Interest Rate

Final Thoughts

While considering the costs associated with borrowing a Home Loan, borrowers must also account for the processing fees and charges. Click here to obtain additional information on specific Home Loan interest rates.