The first thing that most borrowers look at while applying for home loans is the interest rate that they are being charged. This is no surprise as a home loan interest rate has a major impact on the repayment of the loan. There have been far too many borrowers who have struggled to clear their loans simply because they were paying high interest every month. This ultimately affects their credit scores, which is something you should never let happen.
However, let this not come in the way of buying a house. It is possible to get a housing loan without having to pay high interest for it. Here are 4 ways that will help in getting a lower interest rate for the housing loan:
- Go for a floating home loan interest rate
When you apply for home loan, the lender will offer a choice between a fixed and floating interest rate. A fixed interest rate will remain the same throughout the tenure of the home loan. On the other hand, a floating interest rate will increase or decrease based on the market conditions. A few reputed lenders have brought down their home loan interest rates, which are currently the lowest rates in 15 years, with other lenders touted to lower their rates too. This is why, it might be better to opt for floating interest rates to benefit from the home loan interest rate moving downwards.
- Go for a home loan transfer
If you already have an existing home loan, do not be stuck with the notion that getting a better interest rate is not possible anymore. Going for a home loan balance transfer is always an option that has proven to be effective in saving money on the total cost of the housing loan. This transfer involves shifting the existing loan balance from one lender to another for a better interest rate and other/benefits. However, before doing so, make sure to check about the processing fee and other charges to make sure the transfer makes sense financially.
- Apply for a home loan with a female co-borrower
Going for a joint home loan with a co-borrower does not just lighten the burden of repayment, but also improves eligibility and a chance of quicker approval. If one of the co-borrowers is a female, lenders will also offer lower interest rates. This is because female borrowers get a straight reduction of 0.05% in the housing loan interest rate.
- Repay the loan within a short repayment tenure
A short repayment tenure does mean that the EMIs would be higher. However, you are ultimately saving more interest by cutting down the number of monthly instalments. Make sure to use a home loan EMI calculator to know the tenure in which you can pay the loan off as soon as possible.
Now that you are familiar with these tips, make sure to keep them in mind while looking for a lender. Consider numerous loan plans and look at their interest rates to understand which plan is best suited.