Purchasing a dream home can be a milestone achievement for many. To facilitate this purchase financially, homebuyers can avail of home loans. Affordable home loans come with flexible repayment tenors, low interest rates, and other benefits. In this article, we look at simple ways to secure a low-interest-rate home loan.
Affordable Housing Loans: Simple Tips on How to Secure a Low Home Loan Interest Rate
Researching Lenders is Important
Before making a loan application, you can reach out to various lenders and understand what is the best loan amount, tenor, and rate of interest that one can get. You can then negotiate with the lenders for better loan terms. This will ensure that you apply for an affordable housing loan with a lender who customizes the loan plans as per your financial standing.
Pay a High Down Payment
Under housing finance, lenders sanction up to 80% of the property’s fair market value as a loan. The remaining amount must be paid by the loan borrower in the form of a down payment. Paying a high down payment helps ease the obligation of loan repayment by helping one keep one’s loan EMIs affordable. The LTV ratio is the ratio of loan amount availed of to the value of the property. Paying a high down payment leads to a low LTV ratio loan, which is essentially easier to repay due to affordable EMIs. So, if you are opting for a low LTV ratio loan, lenders may negotiate with you on the interest rate. In other words, paying a higher down payment and securing a low loan amount will allow you to secure a low home loan interest rate on your home loan.
Check Your Home Loan Eligibility
Lenders decide the loan amount that one can apply for after taking into consideration a variety of factors, such as the age and income of the loan applicant, and the city in which they stay. The home loan eligibility calculator is an online tool that lets users calculate the loan amount they are eligible for and that they can comfortably repay. When an individual applies for a home loan amount that they are eligible for, the chances of a loan default decrease significantly. Consequently, individuals who apply for housing loans they qualify for are sanctioned loans at better loan terms and conditions.
Make Sure Your CIBIL Score Exceeds 750
The CIBIL score is the one of things that tells lenders a lot about your attitude towards credit and its repayment. A high CIBIL score, i.e. anything between 750 and 900 establishes the fact that the concerned individual has had access to credit for some time and has always repaid the loan on time without defaulting. Further, it also states that the loan borrower is not excessively dependent on credit. Therefore, people with high CIBIL scores can secure home loans at the best loan terms and conditions quite easily.
Final Words
Other than the simple tips mentioned above, maintaining job and income stability, establishing eligibility for government subsidy schemes and opting for a home loan balance transfer are other simple ways to secure affordable housing loans easily.