Owning a house of your own is a dream for many. After living in a rented place for years, people often consider arranging a down payment and taking a home loan to finance their dream house. Availing a loan may seem like a tedious job as it usually takes around 15-20 years to clear the entire debt and also a significant portion of your repayment goes towards interest. In such cases, high EMIs and interest rates can negatively impact one’s financial condition and overall well-being if not planned properly.
Therefore, in order to choose a good housing loan with the best interest rates and EMIs, it is important to find a few such lending organisations that offer competitive interest rates with favourable terms and conditions. Finding a good lender will not only help borrowers to repay their loans faster, but it will also find them the most affordable interest rates.
Read about these tips to know how one can find the best and lowest interest rates on home loans in the market.
Tips for getting the best rate on home loans
1. Go for a short tenure: When taking a home loan, the loan’s repayment term is a crucial factor that can affect interest rates. While longer tenures can reduce monthly installments, they also lead to increased interest. Thereafter, one should always look for shorter terms to minimise their overall interest amount.
2. Prepayment for a reduction in principal amount: It is always advisable to make prepayment of the maximum amount you can afford for the home loan as it helps save a lot of money and lowers the loan interest amount. Also, prepayments at regular intervals help to complete the loan much earlier than the original tenure.
3. Compare between lower rate schemes: A home loan applicant can save a lot of money by finding the right type of scheme with the lowest interest rate. For that, applicants need to thoroughly research different loan products and compare rates with different banks, before selecting one.
4. Transfer of the loan balance: In cases where borrowers feel like their current lender’s interest rate is too high, they can transfer their remaining home loan balance to another bank or lender that offers a lower interest rate.
5. Increase the down payment amount: In cases of home loans, borrowers usually have to pay a specific amount of money as a down payment. However, one should consider increasing this amount to the most affordable extent as it will automatically lower the credit amount, thus leading to lower interest and EMIs.