Top 6 factors that can affect home loan interest rates

When it comes to applying for a home loan, you need to pay interest rate charges. A longer tenor may lead to the payment of higher home loan interest charges. 

Many people do not consider aspects that can affect their housing loan interest rate charges. 

On that note, let’s check out a few factors that can affect your home loan interest rate!

1. Credit score

Credit score plays an important role when it comes to your finally offered housing loan interest rates. The higher it is, the lower is your home loan interest rate. Lenders reward you because you have paid your outstanding on time. 

2. Interest rate types 

Your home loan comes with fixed and floating types of rates. Floating rates are relatively lower than fixed ones. Hence, the type of your home loan also affects your housing loan interest rates. 

3. Property location

Home loan interest rate varies as per the location of your property. If it is centrally located, lenders will offer a lower rate of interest. It is because they will find it easier to liquidate your property in case of defaults. 

4. Loan tenor 

A longer tenor means paying lower home loan EMI but more housing loan interest rate charges, and vice versa. 

5. Your loan amount 

The higher is your home loan amount; the more will be your payable housing loan interest. 

6. Your income stability 

If you are employed with an MNC, Public or a Private Limited Company for at least 3 years, you may enjoy a lower home loan interest rate. Hence, you should ensure to have consistent income stability. If you are earning without a break, the offered housing loan interest rate is lower. 

These essential aspects may affect your home loan interest rate, and you must consider them when you have housing finance to apply.     

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Lesser-known Pointers That Can Affect Their Home Loan Rates

If a family wishes to buy a house with the help of home loans in India, they may do so and move into the home of their dreams. However, the option comes with house loan interest, which the borrower must pay in addition to the EMI amount during the loan term. It means that their home loan EMI has a long-term impact on their income and expenses. They might get the lowest home loan interest rate if their CIBIL score is higher. They can pay lower EMIs and better manage their spending if they get the best home loan interest rate. When it comes to home loan applications in India, the CIBIL score is one of the most crucial indicators that lenders assess. For the best home loan interest rate, a CIBIL score of 750 or more is suggested. Borrowers may improve their CIBIL score by repaying their loan EMIs and other bills on time. 

The following elements that lenders may consider when determining a borrower’s interest rate are the location and value of the residence. For example, the value of a property may increase if it is located in an area with growing infrastructure and facilities. Additionally, a property’s value may be higher if it is close to an airport, a train station, or a bus stop. Therefore, the approved house financing amount may be higher in this scenario due to the lowest housing loan interest rate.

If borrowers use their credit cards for several transactions and make timely payments, their credit score may arise. This can help them get the highest interest rate on their home loan. However, if they use a credit card even if they pay the minimum due on time, the interest rate on their home loan would be higher. Therefore, they should spend more than 40% of their credit limit if they have any loans to apply for and desire a lower rate.

Compare all available home loan offers on a third-party website and choose the one that best meets finance needs and payments capacity. If the applicants follow the advice mentioned above, they should get the best home loan interest rate and pay lower EMIs. Choose from numerous Housing finance companies which have low-interest rates, a 30-year tenor, a high-value sanction, and the option to transfer home loan balances. Simply meet the primary home loan eligibility requirements, submit the required paperwork, and wait for the loan to be authorised.

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Check Your Home Loan Eligibility with Home Loan Eligibility Calculator

Do you wish to avail of a home loan and have no idea about the exact eligible amount? 

If yes, you don’t have to worry! It is because you can calculate your precise eligible amount using the home loan eligibility calculator. 

Read on and explore more!

What is a home loan eligibility calculator?

The home loan eligibility calculator is an online tool that helps you know your actual eligible housing loan amount. 

This way, you can be confident and search for a property in the eligible amount range and avoid loan rejections. 

How to use the home loan eligibility calculator?

Using the home loan eligibility calculator is handy if you follow a few easy steps: 

1. Open the home loan eligibility calculator from your lender’s home loan page/calculators’ section. 

2. On the tool, enter your date of birth and city of residence. 

3. You also need to choose your monthly income, other sources of income, the loan tenor and existing obligations/EMIs being paid. 

4. Once done, you need to click on the ‘Check Your Eligibility’ button. 

5. After you do that, the home loan eligibility calculator will showcase your actual housing loan amount that a lender will approve. 

A robust CIBIL score, consistent employment, and income record will help you have increased home loan eligibility. 

If you wish to know about an exact home loan EMI amount, you can use the home loan EMI calculator. This tool is also available for free on a lender’s website. 

Once you enter your desired loan amount, the tenor and the interest rate, the tool will show your home loan EMI. 

You can also know about your home loan interest charges, along with the total loan cost (principal + tenor). 

Before applying for housing finance, you should be sure of an eligible amount and the home loan EMI figure. This way, you can approach it with confidence.     

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Amazing Features and Benefits of Using Home Loan EMI Calculator Online

 Nowadays, planning a home loan is possible in advance. It is because you can use the home loan EMI calculator online and indulge in efficient financial planning. 

When you are aware of an exact home loan EMI, you can manage your outlays to make way for it easily. 

Let’s know about the benefits of using the home loan EMI calculator online and the steps to using it!

What are the benefits of using the home loan EMI calculator online?

1. You have an idea of an exact home loan EMI

By using the house loan calculator for EMI computation, you can be sure-shot about the precise EMI amount. 

2. It helps you with an efficient financial planning 

When you have an idea of the exact loan EMI figure, you can plan your finances easily. 

3. It assists you in getting real-time results 

The result showcased by the home loan EMI calculator online is real-time and is error-free. 

How to use the home loan EMI calculator online?

1. Open the home loan EMI calculator tool on your preferred lender’s website. 

2. Choose your desired housing loan amount, the applicable rate of interest and the repayment tenor. 

3. Once done, the home loan EMI calculator online will display an actual home loan EMI payable over a tenor. 

4. You will also get to know about your precise home loan interest rates amount. 

5. The home loan EMI calculator online tool also displays your entire loan cost (principle + interest). 

With the home loan EMI calculator online in action, you don’t have to worry about scratching your head. It is because you can calculate your housing loan EMI amount manually. 

The home loan calculator for EMI measurement is available for free on the website of a lender. The home loan EMI calculator online facility is available round the clock. 

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Major Factors You Should know that affects your Home Loan Interest Rates

It is the dream of so many people to either or building a home of their choice. In the event of funds shortage, the facility of home loans has emerged as a viable solution. 

As per your eligibility and other factors, you can avail of a significant amount. But since it comes with a longer tenor, the home loan interest rate charges are on the higher side. 

On that note, it would be good to look at a few factors affecting home loan interest rates. 

1. Your CIBIL score 

Your CIBIL score affects your payable home loan interest rates. It is the mirror of your creditworthiness and hamper’s the faith of your lender in loan repayments. If your credit score is lower, you may not get the loan approval. Even if you do, you may have to pay higher housing loan interest rates. If your CIBIL score is higher, you can get approval at a lower housing loan interest rate. You should work towards maintaining a credit score of 750 or more. 

2. Your home loan value 

The higher is your home loan price, the more you will have to pay as home loan interest rates charges. Hence, if you don’t need a large property, you can opt for smart home and pay lower interest charges. 

3. Your loan tenor 

While it’s good to pay a smaller EMI per month over a longer home loan tenor, it also means repaying higher interest charges. Therefore, you should try to opt for a shorter tenor and save on home loan interest charges. Yes, your home loan EMI may increase over a smaller tenor, but there will be considerable interest savings. 

Since you have an idea about factors affecting your home loan interest rates, you can implement the same and save more on repayments.  

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You Should be Aware of Which Home Loan Tenure is Right for You

A home loan is a convenient financial solution for individuals looking to invest in residential property. Potential borrowers can avail up to Rs.3.5 crore under this funding solution to use for constructing or purchasing a house. 

Nonetheless, availing a housing loan also depends on certain factors, where tenor plays a crucial role.

Factors to consider when choosing the home loan tenor

• Monthly income

Understanding home loan EMI aids borrowers in the systematic planning of monthly outlays. An individual’s income stability plays a crucial role in determining the home loan tenor. In this scenario, an applicant must know that opting for a shorter tenor would mandate paying higher EMI. Comparatively, selecting a longer tenor would decrease the EMI but increase the total interest outgo. 

Hence, a shorter tenor is a compatible option, as it reduces the chances of accumulating higher debt in the long run. An individual with a stable income can request a lender for a befitting tenor option.

• Age

Age is again a crucial factor when deciding a home loan tenor. Lenders give more preference to young borrowers who have more workable years. They easily approve a young borrower’s request to repay the outstanding amount over a longer tenor. Most NBFCs set an age limit of 23 to 62 years for salaried individuals under home loan eligibility parameters.

•  Housing loan interest rate

The applicable home loan interest rate also affects the loan tenor. Usually, this interest rate is revised from time to time, where a longer tenor can significantly increase the interest payment. Comparatively, shorter loan duration decreases the chances of the interest rates being revised to become higher. One can use the housing loan EMI calculator on a lender’s platform to calculate the exact rate of interest.

These few tips can help the housing loan borrower to opt for a suitable tenor that would facilitate ease of repayment.

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Know How to Deal with Hiked Home Loan Rates With Calm

 Home loan interest rate is determined based on the current market scenario. For instance, RBI controls the repo rate that further influences this rate. On top of that, lenders add their spread, and finally, a rate is proposed to borrowers. 

Thus, individuals who want to get rid of fluctuating home loan interest rates can adopt the following measures. 

• Part-payment 

Individuals can make full use of the surplus cash if they have to pay off a considerable portion of the loan. It will allow individuals to save substantially in interest payment and shorten the tenure. Selected financial institutions also facilitate part-payment with minimal charges. 

In this respect, they can use an annual bonus, interest income from fixed deposits, maturity and the likes. 

• Increase EMIs

Generally, lenders tend to increase the loan tenure if interest rate hikes. Even if it temporarily lowers EMI outgo, the cost of borrowing rises exponentially. Thus, it will be wiser for borrowers to opt for a high EMI and reduce the tenure. 

However, set home loan EMI amount as per repayment capacity, which will ensure smooth loan repayment. 

• Pre-payment

Paying off debts quickly allows borrowers to carry on other financial liabilities with ease. Thus, they can pre-pay EMIs to reduce the principal outstanding, in turn, lowering EMI and interest outgo. 

• Home loan balance transfer 

Another effective way to tackle hiked home loan rates is by choosing loan balance transfer. Existing borrowers can transfer their outstanding loan balance to a new lender, which offers better services and lower interest rates. To maximise the benefits, borrowers should opt for this option in the initial phase of repayment when the interest rate generally remains on a higher side. 

However, this transfer also accompanies several charges that borrowers have to pay both to new and existing lenders. Thus, before selecting, assess the need for the transfer and cost of it. 

These are some of the possible ways to manage hiked home loan interest rate with efficiency. 

Read Also: What factors Affect Your Home Loan Interest Rate

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