Buying a home is everyone’s dream, but when it comes to taking a home loan, the interest rate is the biggest factor that can affect your decision. If you want to secure a low interest rate on your home loan, then you have to keep in mind some important tips. Come, in this blog we will know about “Top 5 Tips for Securing a Low-Interest Home Loan”.
Improve Your Credit Score
It is important to check your credit score before applying for a home loan. Your credit score tells the bank or lending institutions how reliable a borrower you are. If your credit score is high (above 750), you are more likely to get a loan at a low interest rate.
So, if your score is low, focus on improving your score for a few months before applying for a loan. You can improve your credit score by paying your credit card balance on time, repaying existing loans on time and avoiding unnecessary credit inquiries.
Compare different lenders
Different banks and financial institutions offer their own interest rates and loan terms. So, it is not wise to take a loan from a lender without comparing them.
You should always compare multiple lenders and select the lender that offers the best interest rate and terms. Using online tools and comparison websites, you can easily compare interest rates of different banks.
Make Higher Down Payment
If you want a low interest rate on your home loan, try to make a higher down payment. Generally, banks take less risk when a borrower makes a high down payment, so they are willing to offer a lower interest rate.
The standard down payment amount is 20%, but if you can make a higher down payment, you can secure a lower interest rate on your home loan.
Choose loan tenure carefully
The loan tenure also has a huge impact on the interest rate of home loan. If you choose a longer tenure, you may have to pay more interest overall, but your monthly EMI may be less.
On a shorter tenure, your EMI may be slightly higher but your total interest outgo will be less. So, choose the loan tenure carefully, keeping in view your financial situation. If your financial condition is strong, try to take a loan on a shorter tenure so that you can save the overall interest.
Negotiate on interest rate
Negotiating with banks and financial institutions is not a big deal. If your credit score is good and your income profile is strong, you can try to negotiate your interest rate. In most cases, if you have a good relationship with the bank, they are ready to offer you a lower interest rate. So, never be afraid of negotiation, but confidently talk about your interest rate.
Conclusion
Taking a low-interest home loan is the goal of every borrower, but a little research and planning is necessary for this.
You can secure a low interest rate on your home loan by improving your credit score, comparing different lenders, making higher down payment, choosing the right tenure and negotiating on interest rate.
These simple tips can help you fulfil your dream of owning a dream home without taking any extra financial burden.