3 ways to reduce the burden of home loan interest rates.

You have taken the big decision of buying a house. Now you are looking for a good financer to help you borrow an adequate amount for it. Not just to buy a home, you can avail a home loan for refurbishing your existing abode too. A home loan has benefits such as:

1. Your application always gets processed quickly so you can look for potential buyers and negotiate with them.
2. The bank keeps all your submitted documents safely.
3. Most home loans come with low interest rates.
4. Women taking a home loan are offered special low-interest rates.

Despite its many benefits, a debt is still a debt. It will make you want to get it off your back as soon as possible. Here are few tips to stay worried free throughout your loan tenure by decreasing the burden of home loan interest rates.

1.) Calculate, analyze, borrow

Interest rates can either make it easy or difficult for you to repay the bank you have loaned from. In such a case, you have to be careful before you take a loan amount. Find out the interest rate, see if it affordable, and then apply for it. An easy way to check your eligibility for a loan amount is by using home loan EMI calculator. You can find this calculator on any loan provider’s website and start using it without being charged as they are absolutely free.

They are easy to use too as they only require you to put in the amount of the loan, loan tenure, and rate of interest. The final number that you get will be the monthly sum you will have to make towards the bank to clear off the debt. If you find that the number is too high and out of your budget, then you can change the rate of interest amount on the calculator. Keep changing it until you get an affordable amount. You can then opt for a loan scheme, which is perfect for your needs as well as within your budget. Taking a loan amount after calculating the monthly EMI helps you plan your finances well in advance and not exhaust all your savings for payment.

2.) Do thorough research

Look out for lenders that offer lowest home loan interest rates. If you have already applied for a loan and have found out about a lender who is offering lower interest rate than your current one, then you can go for refinancing. This option helps you switch lenders based on your changing needs and better advantages. But there may be switch overcharges involved.

3.) Pay it quick

If you have surplus funds with you, then it is advisable to start making huge payments to clear off the debt quickly. Don’t wait till the tenure of the loan to clear it off. Owing to this smart move of paying a large part of the loan amount when you have surplus funds, means you will have to pay lesser interest rate later on due to a reduction in the principal amount.

Thus, no matter whether you are about to take a loan or already have taken one, you can enjoy low and affordable home loan interest rates and be free of all the burden of debt.

Taking a home loan? Know all about housing loan interest rates

Home buying is a big investment, we check the local amenities, vicinity, property price, land papers, etc. before we zero in on particular builder or property. However, due to rising inflation costs and other financial commitments, it's nearly impossible for people to buy a home by fully dealing in cash. Therefore, a home loan is the best option in today's era one can opt for while buying a house. These home loans are specifically customized as per the needs of the individuals by leading banks and non-banking finance institutes.

Of the various factors to determine your loan eligibility, home loan interest rates play the crux role. It is the decisive factor based on which you can determine the loan amount eligibility and your monthly installment. Today, leading banks and finance companies are offering home loans with interest rates as low as 9 to 10% with a nominal processing fee of around 1-2% which is a big boost in the real estate segment.  Basically, the home loan interest rates are of two types: the fixed interest rates and the floating / adjustable rate of interest. There are some firms who offer another type known as tru-fixed rate of interest under which the interest rate remains constant for 3-5 or 10 years and later gets into floating module.

Before you plan to avail a loan, it’s better to stay updated with the current home loan interest rates from the lender institutes which you're eyeing on to avail the loan. Read the newspapers, magazines on regular basis, else you can visit the website to know more about interest rates.

Each bank has different criteria for sanctioning the loan. It's customized accordingly to the individual need.

Here a few important things to follow while choosing the right finance for your home:

Firstly, identify your needs in order to apply for a suitable loan. Understand the income source, risk appetite, an additional income source and credit score as they can highly help you in negotiating for the best home loan interest rates. You should first estimate the amount you require and then see lenders as per your financial needs.

Just because any bank or non-banking finance company offers huge discounts, doesn't mean they are right for you. Initially they may give a discount but later on, fetch unnecessary money towards loan charges from your pocket. So, it’s better to compare interest rates, tenure, loan amount, their certification, credentials, terms and conditions and then go for the one that clearly proves affordable on your pockets.

The website of leading banks and non-banking financial institutions will have a lot of information about the customized products they offer. It’s better to use EMI Calculator that will give an exact idea on what your loan looks like, the principal amount you pay, the home interest rates that are charged, processing fee, and the exact equated monthly installment that you're supposed to pay to the lenders to clear the loan during the tenure. They help you cut down the hassles of usually tedious and time-consuming process. It’s a simplified process and loaded with required data, amortization details, and ability to alter components like interest rates, tenure, or else different permutations and combinations.

Fixed or floating house loan interest rate? See which one is better for you.

Taking a home loan is always a difficult decision. Moreover, it’s a decision that’smade of many other small yet highly important decisions such as choosing a lender, the loan amount, the tenure, etc. Of these highly important decisions is choosing between fixed and floating rates of interest. There are many customers out there that are very confused with regards to the type of interest rate they should choose. If you are one of these individuals then don’t worry, this article will discuss both types of interest rates and help you choose which one is right for you.

Fixed House Loan Interest Rate:
As the name suggests, this type of house loan interest rate stays fixed during the entire tenure of the home loan. It’s generally higher than floating rate of interest and provides borrowers a very good amount of certainty. It allows for better planning and provides customer a large amount of foresight in regard to their repayment structure and process. One can make calculation more easily and can have complete peace of mind with sound financial planning fixed home loan interest rates provide.

If you are middle-aged, risk-averse ad wish to plan your home loan repayment to the t, then the fixed home loan interest rate is perfect for you. It isn’t affected by the fluctuation in market conditions and doesn’t increase regardless of changing government policies.

Floating House Loan Interest Rate:
Again, the name is pretty much self-explanatory. These rates are generally lower then fixed rates. They change in relation to market conditions and government policies. They are never fixed and so the interest rate paid every month can be different. The rate may go up or fall further with corresponding changes in the market.

If you are young, don’t mind the risk and are looking to save some money, then you should go for this type of home loan interest rate. You’ll be able to save loads of money in comparison to fixed home loan interest rates.

What do the expert say about choosing a house loan interest rate:
Firstly, interest rates are at their all-time low and experts predict that these rates will fall even lower in the coming years. So if you opt for a fixed rate of interest, you could miss out on significant savings. Moreover, floating rates are not known to rise above fixed rates.

If you are still not able to make your mind about house loan interest:

If you are still confused, there is another option. It’s called the semi-fixed rate of interest. This type of interest is fixed to begin with and then adopts the floating rate of interest after a certain amount time, say 5 years. This type of interest rates serves both type of borrowers and is ideal if you can predict fall market gains or losses.

You can also switch house loan interest rates midway.
If you are not satisfied with fixed or floating rate of interest rates after choosing either one, you can simply switch over the other by paying a small fee. It makes sense to switch if you are not comfortable with the option you’ve chosen.

Choosing between fixed or floating interest rates is a decision that could prove to be a master-stroke or blunder, so choose wisely. Make use of the internet, speak to financial experts and speak to friends and family to make an informed decision.

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.

Can I Qualify For A Home Loan At Low Credit Score?

Usually, it is believed if you have a low credit score, you don’t qualify for a home loan.  Some people even don’t apply for the home loan if their CIBIL score falls below 650 because of fear of disapproval. Lenders usually charge a high rate of interest in this case. If your credit score is above 700 out of 900, then only you make a winning home loan application.

But, in a developing country like India, many people don’t have good credit score. Their rejection at the lender’s end is a big concern. To sort out this problem, housing finance players bring forth several home loan schemes, where housing finance is possible even at low credit score. Let’s find out how is this possible.

Some housing finance lenders provide home loans to low CIBIL scorers, subject to a plenty of terms & conditions. The obligation can be in the form of a high-interest rate or more income and verification documents etc. The low score indicates insecurity on the part of the aspirants and thus, they need to do lots of homework to regain back their credit position.

However, if one wants to avail home loans with low credit score immediately, he can approach for Swaraj Home Loans launched by IIFL HOUSING FINANCE.’ This product caters to first-time home buyers, who may or may not be supported by formal income documentation and have poor credit history. Large numbers of self-employed people like mechanics, technicians, driver, plumber, with little financial literacy have poor credit history. They can finance their dream home with ‘Swaraj Home Loans’.

Click here to check the home loan eligibility

Still, if you receive the home loan at low credit score, you will love to scale up your CIBIL Score. Another way to qualify for a home loan is availing a joint home loan. Let us elucidate a case study in this regard–

Mr. Rajeev Verma, an industrial worker in Kanpur faced severe home loan rejections as his CIBIL Score was below 650. On the suggestion of a home loan expert, he applied with his working wife and as a result, his home loan application became accepted hassle-free.

All prominent home loan schemes like ‘Swaraj home Loans’ and ‘Credit Linked Subsidy Scheme of Pradhan Mantri Awas Yojana’ permit joint home loan option. The discussion would not be complete if we will not throw some light on the ways to improve the desired CIBIL Score.

1. A payment history can help you – Yes, keep paying the installments on time. To validate your claim, you can also showcase the past payment records to a credit agency.
2. No payment defaults – There should be no defaults in payments for a running loan. Payment history and defaults make a significant impact on the credit score.
3. Appeal for inaccurate things – When you track any discrepancy or error in the CIBIl report, appeal the inaccuracy on the CIBIL website. As per the rules, the lender rectifies the mistake within 30 days of timeframe.
4. Never apply for so many loans – Once you made inquiry for too many loans, it shows you are desperate for home loans and this can affect the CIBIl score negatively.
5. Seek Expert advice – Even after constant attempts, if you are not able to establish the credit, seek any home loans expert advice for the right solution.

So, we can conclude home loan is possible at low credit score with progressive home loan schemes. However, it is always better to keep your CIBIL Score high for maintaining a sound financial portfolio. Some significant steps, discussed above can bring a meaningful change in your credit score in 1 year.

{Source: https://www.iifl.com/blogs/can-i-qualify-for-a-home-loan-at-low-credit-score}

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