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Interest Rates: The Decisive Factor For Housing Loan Finance

Home loans are today ideal financial solutions for your dream of owning your own house or flat. The economy is favorable and banks as well as leading private finance companies have made it really simple to get the best home loan deals. It's just a few clicks away, when you embrace the new technology. You can apply for your loan online and get it approved in no time at all. They are ready to offer customized solutions, with attractive interest rates and longer tenure that proves lighter on your wallet.

However, when taking a housing finance the most important consideration is the home loan interest rates. Lenders in India give loans at different interest rates. Although, the difference may not be significant, however, when it comes to something large like a home loan, even a 0.5% to 0.75% difference can help you save a considerable amount of money in the long run while repaying your debts.

Most borrowers jump to conclusion that the first lenders are the best and opt for the loan. However, instead, it’s better to compare deals of various lenders, check the home loan interest rates, processing fee, loan tenure, eligible loan amount and then zero in on a particular lender. The reality is with good credit score, strong income source and good property value you can negotiate for the interest rate on the housing loan as much as possible. These would be an ideal resource you to try and pitch for better loan deals and you can actually save around thousands or even lakhs of rupees if the property value is high enough in crores.

Here are few tricks to reduce your home loan interest rates:

Gather information

As we said earlier don't hit the submit button to the first lender. Instead, gather as much information as possible. Try to stay updated with the rates of different lenders, check the variable as well as fixed interest rates and compare them, figure out the loan eligibility of different lenders, etc. This information will help you decide relevant factors like additional charges or tenure of interest rates

Credit Score

If you have availed a loan you will definitely know the importance of credit score. It is one of the most important considerations while sanctioning the loan amount and interest rates deals. So, its better to check credit score and if its above 700-750, for a lender it means they have a lower amount of risk for you and will definitely offer you good interest rates deals.

Documentation

Make sure you have all the required documents for the housing loan and ensure that there are no discrepancies in your documents. Always be honest about your existing debts, repayment history, etc. to help lenders understand your financial position. It will increase the confidence of the lender on you and there will be better negotiating opportunities.

Loan Availing Time

Now, that’s the catch! Financial institutes and banks usually have sales targets to meet which they need to achieve on monthly basis. Apply for the loan in the last week of the month or the fiscal year ending when they are in a desperate hunt to achieve the target and wish to offer a concession of 0.5 to 1% in the interest rate deals. It will significantly improve your chance of negotiating for the rates and get a better deal.

Bundle your request

Another excellent way to bring down your home loan interest rates would bundle the loan request. If your relatives, friends or other buyers like neighbors their friend circle are in same builder projects looking for a home loan, you can bundle up your loan request. As the lenders are offered a better business opportunity they will definitely reduce the rates for you.

Negotiate on charges too

Your goal is to save money, and it can be done with negotiating on other charges too like processing fee, pre and post penalty charge, cheque penalty fee, etc. if the lender is not reducing the interest rates further you can negotiate these charges to avail better savings on your wallet.

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