Home Loans are easily available, making it convenient for people to realize their dream of owning a house. The interest rates on Home Loans are quite competitive. And with technology updates, it has become much easier to go online and compare different Home Loan deals.
Current Home Loan interest rate applies to all Home Loans, so it is essential to check the rates beforehand. Here are six critical factors to consider when deciding Home Loan interest rates.
- Credit Rating at the Time of Application
One of the most important assessment criteria for a Home Loan interest rate is your credit rating, which is based on your repayment history. Several financial institutions consider a rating of 700 plus to provide a lower interest rate.
To be on the safer side, look for financial institutions that don’t demand a very high credit rating, like PNB Housing, which accepts a credit rating of 611 plus for a lower mortgage rate.
- Current Income and Repayment Capacity
NBFCs strongly consider your financial capacity before determining the interest rate applicable to your Home Loan, so make sure your finances are stable and your financial documents are in place and fully updated to benefit from lower interest rates. If you have a steady job/business profile and a good repayment capacity, your chances of getting lower rates of interest increase.
- Loan Amount
Basic math applied in this factor – the higher the loan amount requested, the higher the current Home Loan interest rate will be and the higher your monthly EMI will be.
In this case, the only way to secure yourself is to make a heavy down payment. When you make a large down payment, the loan requirement reduces and a lower principal will attract a lower rate of interest and get you a lower EMI.
- Whether You Opt for A Fixed or Floating Rate of Interest
The interest rate charged on your Home Loans is based on whether you have applied for a fixed or floating interest rate.
A fixed interest rate is recommended as it saves you from market volatility, and the rate remains constant throughout your loan period. So you’ll be paying a constant interest over the chosen tenure.
Floating rates change as per the fluctuation in market rates and can be low or high, depending on the prevailing rates of interest. There is a huge risk involved, but you could also benefit from interest rate changes and repo rate reductions.
- Loan Tenure
Again, simple calculation – the more the Home Loan tenure, the higher the interest rate will be charged, as it increases the overall cost of borrowing. Use a Home Loan EMI calculator and find a suitable tenure, so the interest payout fits your budget.
- Property Features
Property features like the location, amenities, neighborhood, type, and locality greatly influence Home Loan interest rates. Suppose the property is in a posh area and one of the country’s top-tier cities. In that case, the interest rates will be lower than purchasing property in low-profile localities.
The physical and social infrastructure of the locality, resale value, and the amenities within the property are also critical factors in deciding the interest rate.
Conclusion
It is important to depend on reliable financial institutions offering the lowest interest rates for your Home Loans. Consider PNB Housing because of its high credibility and reasonable rates of interest, which can be as low as 8.5%* per annum for salaried & 8.55%* for self-employed individuals.
Besides that, make sure you maintain a good credit rating and repay all your other debts and outstanding loans to get the best deal in Home Loans at the lowest possible EMI.
