How to Get Best Interest Rate on Home Loan? Some Quick Tips
Getting a Home Loan is one of the biggest and most important financial decisions in a person’s life. If you are looking to buy a new home and do not have large piles of cash or family money to support the purchase, you will need to apply for a Home Loan. Being a secured credit vehicle, Home Loans are considered a safe bet by banks and other lenders. Therefore, their interest rates are generally much lower than Personal Loans or Car Loans or any other type of loan.
It is worth noting here that currently, Home Loan Interest Rates are lowest since 2000. Besides, a fall in realty prices makes for a perfect buyer’s market. It is an opportunity for anyone who wants to buy a home for self-use.
Yet Home Loan is a long-term commitment. On average, a Home Loan is availed of for 10 to 20 years. The interest rates on Home Loans are floating, and most commonly, your repayment duration tends to change with a change in interest rates. This means that you always have to strive to get the Best Home Loan deal right from the beginning.
Below are a few tips for you to help you grab the best interest on Home Loan.
- Start with shopping around different lenders: Many buyers tend to go with the bank or lender that the builder suggests. For sheer convenience, buyers believe that these recommended Home Loan bankers would have already done the due diligence from the builder’s side. The fact is that bank sales teams are sometimes paying commissions to the builders on every loan seeker that they bring to them. The best approach is to ask around a few different banks and NBFCs about their interest rate for a housing project. Yes, it may entail a bit more paperwork on your part, but then all banks ask for processing fees anyway. If a bit of haggling, shopping, and bargaining before you apply for Home Loan can get you an interest rate better by even half a percent, calculate the overall saving in 20 years!
- Reduce the overall loan amount: Increase your down payment amount and reduce your Home Loan requirement. The lesser amount of Home Loan makes the bank consider that you have some money saved away, and you can take up a lesser amount as a loan. This works in a very simple way. You are mortgaging your new house in the Home Loan to the bank. If you are willing to pay more from your pocket, your home’s mortgage value as security goes up for the bank. They will be happy to offer you a better interest rate because this makes a significant advantage to their risk to return ratio.
- Shorten the loan tenure: If you are looking to take a Home Loan, you might be able to get a better deal if you shorten the Home Loan tenure overall. The reason is simple, you are going to pay less like a total to the bank, but your EMI will be much higher. This means that the bank can assume that you will be able to repay the amount of your Home Loan promptly. Banks will always consider a shorter-duration loan as a less risky deal than a full duration Home Loan. They will be open to offering you a better deal on the interest rate.
- Strengthen your CIBIL credit report: This goes without saying, but no one should use credit more than it is necessary. With online shopping being so popular these days, most people tend to buy even daily groceries online. Gat a basic Credit Card when you think you are ready to start building credit score and start using it in small chunks. Do not overcharge your card! Do not carry a balance on your card. Do not default on your payment. Ever! If you follow these three principles on a religious basis for at least 3 years, you can easily build a credit score above 800. Banks will consider you a prime customer and will happily give you a better interest rate on Home Loans.
- Start saving more with the same bank: One sure shot way to ensure that you get the lowest possible Home Loan Interest Rates is to save a lot with the bank from which you intend to take the Home Loan. If they have a bancassurance operation, take out a life insurance policy with them. If the bank offers a Public Provident Fund account, get the PPF account with them. Buy a few tax-saving fixed deposits with them. Get a recurring deposit or open a Savings Account wand put in a huge amount of your liquidity with them. If you can move your salary account to them, all the better. Ask your parents to move their retirement savings to that bank and make you a nominee. The banks need to see that you can make wise decisions in money matters and that you have the financial firepower to overcome a few stormy months. This helps them build confidence in you as a customer. Moving current accounts to Home Loan will be a great way to get better interest rate deals for self-employed individuals.
- Get a job with a better company: Like it or not, but banks love customers who work in huge multinational firms. Usually, people who are working with listed companies or large multinational firms can get much better interest rates on Home Loans than people working with smaller companies. Banks have huge business dealings with these MNCs and listed firms. The sheer number of their employees means that banks can expect to get a lot of business from their employees and are therefore willing to give them much better deals on their offerings. If you can switch a job to a better company, banks will be able to offer you much better interest rates.
- Negotiate Earnestly: Getting the best interest rate when you Apply for Home Loan is a matter of negotiation skills. The better you are at negotiating a good deal for yourself, the better your chance of success. Haggle, shop around, tell the bankers you are getting a better deal, and always be ready to walk away from the table.
One of the significant pushes in Digital India has come from the banks. Just like online insurance will get you a better deal than an agent in your local market or at the car dealer, applying for Home Loan online can get an attractive offer and better interest rates. Besides, you also get free professional advice to guide you at each step of borrowing.
To apply online for Home Loan, Personal Loan, Credit Card, Business Loan & LAP visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 100+ Banks and NBFCs. We have served 4 million+ happy customers since 1989.