In today’s financial market, every borrower wants to avail loan at a very low-interest rate. The reason behind this is it affects their EMI amount.
So, there are many financial institutes who are providing housing loan at a very low-interest rate with easy EMI tenure, so that borrower doesn’t face any issue with their loan amount.
When someone decides to avail of a home, their concern is to reduce loan interest charges. It is because loan interest charges are extra expenses. And it is to be paid over and above the principal amount.
While applying for a home loan, the case is also true.
Borrowers want to reduce home loan interest rates and pay reduced EMIs. It is because a home loan is a long-term commitment.
Also, people repaying it over a longer tenor have to pay higher home loan interest rate charges.
Hence, it would be right to check out vital factors affecting your home loan interest rates. Read on!
The following elements will influence your home loan interest rates
- Your CIBIL score
Talking about housing loan and not mentioning the importance of your CIBIL score is affecting home loan interest rates will be a crime.
Along with other aspects, your credit score is one of the key factors influencing your housing loan rates. If you have a robust CIBIL score, it means that you have paid your loan EMIs and other bills on time.
It also signifies that you are a safe bet and could be relied on for timely repayments. The higher is your credit score, the better chances to get lower home loan interest rates.
Also, the rate of loan approval will be faster. You can keep your credit score higher by paying your ongoing loan and other EMIs on time. It should be your focus to have a credit score of 750 and more. A good credit score always helps you in your financial journey.
- The existing MCLR rates
MCLR in banking is a benchmark lending rate at which commercial lenders are permitted by the RBI to lend. MCLR comes with a reset clause of 6 to 12 months.
During this period, if there is a change in the prevailing MCLR rate, it will affect your home loan interest rates. It denotes that the offered home loan interest rates may increase or decrease during the tenor. But, it also ensures that you don’t overspend by going for a fixed interest rate.
- The location and the resale value of your new home
The place where your property is located and its resale value if you fail to repay on time also govern home loan interest rates.
If your new home is centrally located with all amenities, you can get a lower home loan interest rate. It is because lenders may not have issues in liquidating your property during defaults.
- The tenor of the home loan
Many people like to settle for the longest possible tenor of their housing finance. It is to help them pay smaller EMIs and avoid hurting their outlays. But, it also leads to the payment of bigger home loan interest rates charges.
On the other hand, if you choose a small tenor, your EMI amount may increase. But you will end up saving on paying extra home loan interest rate charges. It will be good to check out the Bajaj Housing Finance Limited Home Loan EMI Calculator and know an exact payable EMI amount. This tool is available on the lender’s website for free and works round the clock.
- Your job profile
If you are a salaried applicant, you should have a consistent employment history of 3 years. If not, you may not be approved for the loan or may have to pay a higher rate.
Prospective self-employed borrowers should also have a business vintage of 5 years. If one can meet such eligibility norms regarding employment, they can enjoy lower home loan interest rates.
- Your age
If you are a young applicant, lenders can reward you with a higher amount at a lower home loan interest rate. Why? It is because a young applicant has got more workable years left to repay than someone nearing retirement.
Thus, lenders have less risk of defaults for young applicants than older ones. It is one of the key reasons why it is advised to apply for a loan when you are young.
Thus the above mentioned points are helful and if you follow them, it will surely help you in your financial journey. By following these points, you can avail home loan at a very low interest rate and you can pay your loan amount in easy EMIs and save wisely.
Hope this piece of information has helped you a lot and in coming time you will surely follow these factors that will help you in opting loans at a very lowest interest rate.