Home loan interest rates are a huge area of concern for the borrowers when it comes to avail of housing finance. It’s the crux of any form of a loan and if not figured properly you can get into deep financial trouble. An affordable interest rate can help you reduce the monthly EMIs and you can comfortably make payments towards it. There are leading aggregator sites online that will help to compare apple-to-apple online and make a wise decision about choosing a particular firm and interest rate for a housing loan.
So, here are a few tips that will help you to reduce the burden of your housing loan interest:
Firstly you should start saving for a higher down payment
Any lender sanctions up to 80-85% of the home loan amount and the rest 15-20% are paid by the borrower itself. Therefore, experts say you should start saving for the margin money for a year or two and accumulate a larger down payment. It will help you borrow a small amount and thus, the interest calculated would also be less. Larger down payment will mean you pay less interest on the entire tenure of your housing loan.
Start building a good credit score for better home loan interest rates
Besides getting speedy approvals, a good credit score can help you negotiate with the lenders for low-interest rate deal. It displays your willing to repay your debt on time and makes you a responsible citizen as well. Thus, lenders are willing to entertain such candidates, consider their application and do quick loan sanctioning. While you’re saving up funds for a larger down payment you can work on your credit score as well by repaying any form of pending debt such as car loan, personal loan, credit card bills, etc. Make sure you make the EMI repayment on time. The oldest credit card will reflect your repayment history and your credibility time period offered by the bank. It should positively impact on your credit score and leverage your negotiating powers. Even 0.5-1% decrease in the home loan interest rate will help you save loads of money over time.
Go for floating home loan interest rates
Many people want to protect themselves against the market tides and thus opt for a fixed interest rate. But remember fixed rates are on the higher side and yield more money. If you’re in your late 20s or early 30s you can take a little bit of risk and can opt for a floating rate on your home loan. You can definitely save money and on an average, it would be a balanced interest rate in the long run. Floating rates are normally lower compared to fixed interest rates and you can save a considerable amount of money. You can talk to the experts who can anticipate well on the real estate and loaning sector and accordingly give a wise suggestion on the interest rate deal. If the interest rates start to increase too frequently and consistently you can shield yourself with fixed interest rates for a minimal fee.
Keep making prepayment at regular intervals
It’s one of the golden tips to reduce the overall burden on your home loan interest rate. Making prepayment will decrease the principal amount and automatically bring down the interest rate incurred on it. So, if you have got any increment, bonus, investment maturity returns you can always divert it for making prepayments and enjoy a lower monthly installment of your home loans.
Always compare and opt for a balance transfer
If you see that your existing lender is not giving you much benefit on the interest rates, you can compare the home loans in the next 2-3 years’ time and plan for a home loan refinance. If you struck with a good deal talk to your existing lender. If they’re not willing to offer it, in spite of your good repayment history and credibility you can always migrate to another lender. You should go for such option as long as the switching fee and other charges implied are lower than your potential savings on your new interest rate deal.
Hope these tips will help you save significantly on your home loan interest rates. Don’t forget to take an opinion from your financial expert. Apply for housing loan online today!