Planning to apply for a home loan? With a range of options offered by financial institutions, the confusion in mind is bound to increase when you get to know about varying home loan interest rates. Getting a fair deal on interest rates will be easier if you pay attention to some of the basic facts that are listed below:
Check your CIBIL Score
The more the CIBIL score you have, the better are the chances of getting a lower home loan interest rate. If you are among those who have a credit score of 750 or more, prospects will become brighter on negotiating good interest rate deals. The credit score is counted on a total of 900.
In case the credit score goes below 750, the interest rate for the home loan will definitely go up. You will need to improve your CIBIL score in case you wish to seek home loans at a lower interest rate. The CIBIL score can be improved by adopting measures like clearing of any pending debt, paying off the credit card balances and correcting different errors that the credit report might have.
With the rise in the CIBIL score, the chances of getting a home loan at a better interest rate will increase.
Increase the amount of down payment
Ideally, you should pay a higher down payment so that the principal amount is reduced when you opt for a home loan. The lenders calculate the home loan amount based on the principal amount. The general rule here implies that a minimal of 20% of the principal amount of the purchase price should be paid to the lender, so that better home loan interest is charged.
Keep the loan tenure in mind
Keep in mind the fact that the principal amount and interest rate of the home loan are divided over the months, thus having a longer tenure will ensure that you have a lower amount of EMI. It means that the home loan EMI and the interest applicable on the same will have to be paid for a longer duration. It ideally implies that the interest applicable will be more over the rest of the period. Thus, the loan tenure should be a binding factor when it comes to calculating the interest rate that you will end up paying.
Show your negotiation skills
There can be no better time to display your negotiation skills than at the time of seeking a home loan. You might be a new customer of the lender, but someone among your family or friends could know the lender. Use this occasion to get some worthy discount from the lender. Sometimes, the lenders themselves reduce the interest rate keeping your past financial transaction record in mind. Therefore it’s better to maintain a balance between your earnings and spending.
Employment stability also counts
Borrowers who have been switching careers or have been jobless will definitely attract a higher rate of interest on home loans as the lender is not sure of the financial viability of the amount they are lending you. The lenders usually prefer that the person should be in a regular job for a minimum of two years. In cases where the income is declining over the years, the interest rate applicable would be higher. Therefore, always try to maintain employment stability when it comes to cracking good interest rate deals on the home loan.
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The customers need to keep these points in mind, and you are definite to crack a good and worthy deal when it comes to securing a home loan and that too, with a lower interest rate.