When looking to buy or build the dream home, individuals get in touch with banks for the purpose of availing a home loan. However, prior to finalizing the bank from where the loan is to be availed, individuals should check out other banks and make comparisons to get the best rates. This is necessary as it ensures that the individual is not required to pay a hefty amount of money as interest. With the home loan interest rates starting to tighten up following the decision of Reserve Bank of India to hike the repo rate, focussing on finding the best interest rates is all the more important. Here, we take a look at what an individual who is looking forward to applying for a home loan must do to get the best home loan interest rate.
To ensure that the best interest rate is availed when it comes to home loans, a potential borrower must ensure that the following points are carried out:
- Research about multiple lenders.
- Make sure that a healthy credit score is maintained.
- Look at availing loans which have floating interest rates rather than fixed rates.
- Ensure that they carry benefits like a top-up loan and principal holiday period.
- Opt for flexible repayment tenure.
Now, let us take a look at the above-mentioned points in detail.
Research about multiple lenders - When looking to avail home loans at competitive interest rates, research becomes very important. It helps the individuals in finding the best rates from among various banks and financial institutions that operate in the country. With many loan aggregator websites available in the market, it is quite easy for borrowers to research the best interest rates offered by banks and non-banking finance companies based on their requirements. Doing thorough research on finding the best interest rates on offer ensures that half the task is completed.
Maintain a healthy credit score - Having a healthy credit score is of prime importance when it comes to availing a loan, be it a personal loan or home loan. The credit score of the individual reflects the creditworthiness and prudence with money management. The higher the credit score, the chances of banks and financial institutions offering a loan at lower interest rates are better. An individual can check for his/her credit score for free once a year from four credit information companies like TransUnion CIBIL, Equifax, Experian and High Mark in India. The best way to maintain a good credit score is to ensure credit card bills and EMIs are paid on time.
Avail loans which have floating interest rates - Another thing that individuals can do is to opt for a home loan that has floating interest rates rather than fixed rates. This is because floating interest rates are slightly lower than fixed interest rates. Apart from that, floating interest rates change according to the market dynamics, unlike fixed interest rates which remain the same throughout the loan tenor. A home loan availed on floating interest rates comes with no prepayment penalties which makes it even more viable to the borrower.
Avail a home loan that offers added benefits - Another thing that the borrower can do is to look for a home loan that comes with major benefits like principal holiday period, top-up loan and easy balance transfer. Availing a home loan which comes with such benefits ensure that the borrower saves a lot of money in the long run.
Select a flexible repayment tenure - When availing a loan be it a personal loan or a home loan, the tenor plays an important role. Selecting the best tenor is quite necessary as home loans are long-term commitments. Finalizing the correct tenure will ensure that the EMI amount is brought down, even though the interest outgo is pushed up. Opting for a flexible repayment tenor will ensure that the EMIs can be spread depending on the cash flows.
Making sure that the above-mentioned points are followed will enable the individual in finding the best home loan interest rate that is offered by banks and non-banking financial institutions in the country. So, if are looking to borrow a certain sum to buy your dream home, keeping the above-discussed points in mind can come in handy.