The Importance of Choosing Right Home Loan Interest Rate

Owning a house is one of the most cherished dreams for many people in India. However, it’s not easy as the real estate price is skyrocketing high and its difficult to fund your housing needs with little savings you do over the years. You need a proper financial resource and willingness to take a substantial home loan to buy the home. In this competitive era, there are a lot of reputed banks and private finance companies that offer home loans with attractive interest rates and flexible repayment options. You can compare quotes from top lenders on aggregator sites and make an informed decision.

Thus, as a borrower, you have to be well-informed. Ignorance cannot prove to be a bliss especially in the home loan segment in India, since its a long-term financial commitment. You should be aware of the jargon, the rules & regulations, and the latest trends in the loan lending sector. One of the most significant trends is to keep a tab of home loan interest rates. The rates and their changing trends as per lender MCLR, RBI’s repo rate and other important factors will dictate the right choices for the borrowers and the companies. Home loan interest rate is the crux of the entire borrowing. Ideally, lenders opt for fixed, floating and semi-fixed rate of interest rates. There are several ways, we can reduce your interest rate and bring down the overall cost of your home loan.

So, let’s understand home loan interest rates in details:

Fixed interest rates – It is fixed throughout the loan tenure. It’s the most preferred by the people who avoid risk and stay protected from market tides. The interest rate is slightly higher and these people are willing to pay extra compared to floating rate. So, if you’re comfortable with slightly higher EMIs, then you can opt for fixed interest rates.

Floating Interest rates – It keeps fluctuating and depends on government policies, lenders base rates, and market conditions. They can be lower or higher compared to fix rates and depends on market volatility. Market experts suggest those borrowers who are avid risk-takers such as businessmen can opt for floating interest rates.

Partial fix-floating – Some lenders have started offering customized solutions to the borrowers in the form of partial fix-floating rate. Semi-fixed is for a fixed period of time and later on, it gets converted to adjustable rate till the remaining tenure. It is suitable for a borrower who initially don’t want to fall into market volatility. Once they’re sure, they can afford the tidal conditions, they can adjust the budget and go for such plans.

Some tips to reduce your home loan interest rates:

Try to pay the maximum down payment because then you will require less money. It will automatically reduce your home loan interest rates. And you would be able to get a rate as per your affordability

Don’t go for higher loan limits, if you don’t require more amount. Else it will increase your debt and the overall interest rates. Choose the home loan amount as per your affordability, repayment capacity and years for retirements.

Keep your credit score up to the mark as lenders will first evaluate your score and income stability before offering you the home loan interest rates. Ideally, a score of 750+ is considered good enough to negotiate with the lenders for low rate deals.

Choose lower tenures will automatically bring down the home loan interest rates. However, you have to financial withstand the EMI that you would have to pay because it will be on a slightly higher note.

Adjustable interest rates prove affordable taking into consideration the entire graph of your loan. Though there is a risk of rate being increase if you save during the low-interest rates you can strike a balance well.