For most individuals, buying a house is considered one of the most significant achievements in life. It is no surprise how expensive real estate prices can get, which is why most homebuyers rely on home loans to arrange for the required finances. Most financial institutions offer up to 20 years to repay the loan. This gives borrowers ample time to pay off the home loan monthly installments.
Now, before applying for a home loan, it is imperative to look at the interest rate that the lender is charging. This is because the interest rate can significantly affect the monthly installments of the home loan. Financial institutions set an applicant’s home loan interest rate based on certain factors. Being aware of them can help bring down the housing loan interest rate.
So, take a look at the factors that influence the home loan interest rate:
1. Employment record
Lenders always evaluate the employment records of their applicants. This ensures that the loan will be repaid on time without any financial difficulties. Having a steady employment record and an excellent monthly income is vital for getting a competitive loan. Borrowers with good income stability are more likely to get offered a lower home loan interest rate.
2. Location of the property
Even the property’s location can influence a home loan’s interest rate. A property with a good resale value, thanks to its good infrastructure, connectivity, amenities, etc., is more likely to fetch a lower interest rate than a property that is old and has a low resale value.
3. Credit record
Financial institutions always check the credit records of their applicants before approving loan applications. This is why it is so essential to maintain a good credit score before you apply for a home loan. It is best to keep a credit score of 750 or more, as this can get you benefits like a higher loan amount at a lower interest rate.
4. Loan amount
For a higher loan amount, a borrower is likely to incur a high-interest rate too. This is why it is advisable to try and make a high down payment, which will help reduce the loan amount. With a low loan amount, the lender faces less risk so that they can offer a lower home loan rate.
Before speaking with a lender, make sure to keep the factors mentioned above in mind, as they can help in lowering your home loan rate. In addition, it would be wise to make use of a home loan EMI calculator beforehand. This way, it becomes easier to understand whether the lender’s interest rate is suitable. It is also essential to check your home loan eligibility with the lender. This is to know about the loan amount that the lender is willing to offer based on your eligibility.