Understanding Home Loan Interest Rates: How to Find the Best Deal

Home loans are long term commitment as the loan tenure of these loans usually is around 20-30 years. Home loan interest rate thus plays a crucial factor as it determines the additional amount which will be payable as interest apart from the principal amount during the loan tenure. The borrowers thus should strive to get the best possible deal on home loan interest rates.

Before one commits oneself to home loans, it is imperative to understand the different types of interest rates charged on the home loans. The two types of home loan interest rates are viz. Fixed and floating.

Fixed Interest Rate: Herein the rate of interest doesn’t change during the loan tenure. Under this, the borrower is aware of the monthly EMI he is liable to pay. The EMI doesn’t change through the course of the loan.

Floating Interest Rate: This interest rate is variable and changes with the lending rates of the lender. It keeps on changing during the loan tenure. As per the new RBI guidelines, the banks have to follow the external benchmarks in retail loans like home loans. Herein, the borrower can save on some money when the lending rates fall. This is a preferred option by various home loan borrowers.

Read More : Latest Home Loan Rates Across Lenders

Home loan interest rates are determined by some factors. These include:

1. Credit score/ CIBIL Score: This is a very important aspect of any loan. Home loan providers consider your credit score to check for your creditworthiness. A credit score between 550-900 is desired by the home loan lenders. Higher the credit score, the better deal in terms of rate of interest the borrower is likely to get. A fair credit score may result in a higher rate of interest on the home loan. One should aim in improving and maintaining the credit score by making the monthly repayments on time.
    

2. Loan amount: The loan amount is another crucial factor which determines the rate of interest on home loans. Usually, home loan providers have pre-defined amount slabs based on which they decide the rate of interest.
    

3. Type of rate of interest: On account of whether you choose the fixed rate of interest or floating interest rate, the final outgoing amount as interest during loan tenure will be determined. Fixed-rate of interest has pre-defined EMIs which the borrower needs to pay throughout the loan tenure. Floating rate of interest is dependent upon external factors and may tend to increase or decrease resulting in fluctuating EMIs.
    

4. Income: Lenders seek the income of the applicants to be assured of timely repayment of the loan amount. Type of employment is also taken into consideration. Salaried individuals working with a reputable organisation are more like to get a lower rate of interest on home loans in comparison to self-employed individuals and professionals who do not have a steady influx of income. 

Lenders uphold the sole discretion of sanctioning home loans. However, with careful planning, one can avail the best possible offers and deals in terms of interest rates. Co-applying for the home loan with your wife can result in getting leverage on the interest rate and also enhance your eligibility for a home loan.

Also Read : Lowest Home Loan Interest Rates Compared

Before applying for the home loan, it is imperative to compare different lenders for the best offerings in terms of interest rates. LoansJagat offers an excellent platform to the borrowers for comparing various home loan providers on parameters like rate of interest being offered, loan amount, processing fees and charges, EMI and loan tenure. Once you have zeroed on the lender, you can directly apply for the home loan from their portal itself instead of visiting the bank directly or through the bank’s website. LoansJagat allots you a dedicated loan advisor who helps you sail through the loan application process seamlessly. 

The dedicated officer guides you and advises you throughout the process and ensures a quick loan application processing and approval. It is also a mandate to check the home loan eligibility criteria as defined by the lender to avoid getting your application getting rejected. Once through it, upload the requisite documents online itself and attach alongside the application form. Get almost instant home loan approval with LoansJagat and buy your dream house at the lowest interest rates on your home loan.