5 Vital Tips to Get the Lowest Home Loan Interest Rate that Satisfy your Income
When buying a new home using the home loan facility, everyone wants to avail of it at the lowest home loan interest rate.
Why is it needed when a home loan is already secured finance?
It’s because it comes with a longer tenor. And most home buyers go for a longer tenor to pay lower EMIs.
But that also means dealing with a higher home loan interest rate.
But, following a few tips can help you enjoy the lowest home loan interest rate matching your income the best. Even if you are an existing home loan customer, you can still lower your loan interest cost. Read on!
Follow these tips for the lowest home loan interest rate
- Pay more as the down payment
When you apply for a home loan, a lender won’t sanction the entire home amount as the housing finance. The most they will approve is between 75–90%. The remaining must be arranged by the customer. It is called the down payment amount. The higher is your down payment; the lower will be the borrowable amount. Once that’s down, your interest charges will also go down. In turn, it will help you avail of the lowest home loan interest rate and pay reduced EMIs.
2. Opt for a shorter tenor
Even though a home loan comes with a longer tenor of up to 20 years or more, your aim should be to go for a smaller tenor. Why? It is because doing that will help you enjoy the lowest home loan interest rate. A shorter tenor may mean paying higher EMIs, but big savings on home loan interest rates. A shorter tenor will also help you repay the loan faster and make you debt-free.
3. Ensure to shop around at least once
In their quest and excitement to buy their dream home, a prospective home buyer settle for the first housing loan deal coming their way. But competition has mounted to another level between lenders COVID-19. They are offering housing finance at the lowest home loan interest rate. Hence, you should make the most of it. The best way to opt for the lowest home loan rates is to compare all offers. You can do that online on a third-party website for free. Once done, you can pick a deal matching your needs and budget the most.
4. Make prepayments during the tenor
If you are an existing home loan customer and looking to reduce your internets burden, there is a way out. You can make prepayments during the tenor. Every time you do that, you will be able to lower down your principal. And it will reduce the payable interest charges. But, before you think of making prepayments, it is good to get estimates of charges. Lenders may charge a prepayment amount when you prepay. If the charges are more than your savings, you should avoid them.
5. Go for a home loan balance transfer
A home loan balance transfer is when you switch your current home loan account to a lender offering a reduced rate. This way, you can enjoy the lowest home loan interest rate and pay reduced EMIs. Also, a home loan balance transfer gives you a top up loan facility. It can cover your different financial needs without restrictions on usages at a lower rate and a longer tenor. But, before switching your home loan, you must check the charges levied by both lenders. If they charge more than what you will save, there is no need to go for it. In that case, renegotiating for a lower rate with your existing lender is the only way out.
Additionally Read: Here’s how to use the Bajaj Finserv Home Loan Calculate to know your EMI and Eligibility
If you take care of these aspects and implement them, you will enjoy the lowest home loan interest rate suiting your income the best.