As per the update on 5th August 2022, the Reserve Bank of India increased the repo rate by 50 basis points. The current rate, hence, stands at 5.40%. With this, the latest home loan interest rate offered by various housing finance companies is likely to increase. While this can be challenging to afford, borrowers can reduce the rates of interest on their home loans in multiple ways.
Tips to lower home loan interest rate
Some tips that borrowers can follow to reduce home loan interest rates are:
1. Opting for a shorter repayment tenor
Housing loans usually come with a substantially longer tenor of up to 30 years or more. However, if borrowers choose to keep their preferred tenor shorter for repayment, the overall interest outflow reduces significantly. EMIs will be higher though. The best online tool to check estimated EMIs is a home loan calculator offered by leading HFCs. This calculator instantly displays the monthly instalments based on certain details that the user provides.
2. Reworking the EMIs annually
Most reputed housing finance companies allow borrowers to revise their EMIs every year. Therefore, individuals should opt for this facility if they experience a consistent increase in salary or income. This will eventually decrease the chosen tenor, bring down the applicable rate of interest and close the loan quickly.
3. Availing a balance transfer facility
If one has an existing home loan which incurs high interest rate, they can reduce the same by availing the balance transfer facility. This feature allows borrowers to shift their outstanding loan amount to a new lender at a comparativelyConclusion lower rate of interest. Besides, they are also entitled to better terms and conditions on the credit.
4. Making part prepayment
Making part prepayments towards the housing loan with excess funds like income hike, bonus, etc. is another convenient option to reduce interest rates. The part prepayment facility permits borrowers to pay off a certain amount of the loan principal much before its due date. Doing so lowers the outstanding principal and hence, the current home loan interest rate on the housing loan.
Beside the above-mentioned factors, there are a few more ways to lower the rate of interest on a housing loan before availing it.
- Maintaining a high CIBIL score assures creditworthiness as a borrower. The ideal score is 750 or above on a scale of 300 – 900. With a higher score, eligibility for loan approval and reduced interest rate increases.
- Housing finance companies offer an LTV of 75% – 90%. Borrowers need to bear the remaining amount as down payment. If they make a bigger down payment, their requirement of the home loan amount lowers. This directly reduces the applicable rate of interest.
- If their eligibility is impressive based on the various parameters, borrowers should try negotiating with the lender for reasonable rates. However, they must make sure that they have submitted all the necessary documents, valid and updated.
- Individuals can also enhance their credibility by fulfilling the eligibility criteria required by the loan provider. Some of the parameters include age, work experience, nationality, etc. Additionally, they should also learn about the factors that can affect their housing loan eligibility.
There are reputed HFCs whose latest home loan interest rate is quite affordable even after the recent increase in repo rate. Approaching the reliable one also brings exclusive features and benefits along with online application process.
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Investing in new city paradise will be a long term best opportunity for the investors. The developers are glad to offer their clients with the legal housing venture that is not only filled with opulent amenities and serene environment but also at highly affordable rates. All the facilities will be available for the residents within the society and easily accessible. This society is not only newly launched but also its legal, it has all the approval from the authorities which is the main reason for investors to invest in this exceptional housing venture.
In addition, housing finance companies provide pre-approved offers which make the loan application procedure hassle-free and faster. Exclusively for existing customers, such schemes are applicable to home loans, loans against property, credit cards and various other financial products. To check their pre-approved offers online, individuals need to share their name and contact details only. Home loan repayment is an extensive procedure and can weigh down your financial budget in the long run, if not planned appropriately. As interest draws out additional fund towards the home loan repayment, borrowers must ensure that this payable amount is minimal. They can improve their chances by following the above mentioned pointers and purchase the most suitable house effortlessly.