Some ways to reduce the interest rate on home loans.

Buying your dream home involves a lot of planning, property survey, builder’s reputation, money at stake and lastly cracking a better housing loan deal. When it comes to housing finance the first thing buyers are concerned is the interest rates incurred on your loan. Interest rate play an important role in your home buying decision, when one opts for a housing loan.

You can say it’s a decisive factor. Presently, the home loan interest rates are around 8.50 to 9% mark that looks quite attractive compared to 3 to 5 years back.

Other factors banks or private companies use to determine rates are as follows: Age of customer and the property, repayment capacity, educational qualifications, job stability and income source, number of dependents, co-applicant’s income, assets and liabilities, savings habits, credit history and future inflation costs.

Your interest rates will impact your principal amount, your monthly installment and other fees. So, it’s better to carefully evaluate it before availing a loan. There are several ways to reduce the interest rates all the more.

Some of them would be:

• Women are offered special concession of around 0.5% on home loan.

•  If you hold a good credit score you can negotiate with the private vendors and banks for better home loan interest rates.

• If you hold a joint income with your spouse or parents you tend to get a lower interest rates or higher principal amount as per your requirements.

• If you take home loan when you’re young investors have a faith on you that you’re in a position to pay the debt on time thus you can negotiate on rates.

• Having a suitable job or sound business can help you fetch good amount of discount on your housing loan interest rates.

Experts say borrowers should take into consideration one’s current and future cash flows, while deciding the monthly installments. Banks or private finance firms are also flexible in keeping a lower monthly installment during the intimal years. Higher monthly installment may eat up a major chunk of your earning that could lead to financial distress.

There are several online sites that help buyers calculate home loan interest rates using loan calculator. These calculators give an exact table array of principal amount, interest rates applicable, processing and other charges incurred on your entire tenure of housing finance.  This way you will be prepared before hand on exact EMI and the interest rate that you have to pay on your housing loan.

These days using online aggregator sites you can compare based rates and spreads across various banks and private finance companies on your home loan. If you see substantial scope to reduce the home loan interest you can consider the following options:

Maintain a good relationship with the lender, and then negotiate for low revised rates by paying a one-time fee, being charged by banks or finance firms.  Migrating to another bank or finance company could prove beneficial who often target the potential customers with slashed rates. Remember even a 0.25 to 0.50% on your home loan interest rates can make a vast difference and help you saving lakhs of rupees on the long run.