Avail Your Dream Home with Lowest Home Loan Interest Rate in 2021

Your dream home in 2021 maybe just a home loan application away! 

A home loan facility helps you get a large amount as per your eligibility. 

Since a housing loan is secured, it comes at a lower rate. But repaying over a longer tenor may increase your interest charges.  

If you wish to avail yourself of the lowest home loan interest charges, this short post will help you know more! Read on!

1. Go for a shorter tenor 

Opting for a smaller tenor means that you have to pay the higher home loan EMIs. But it will also help you to repay reduced home loan interest charges. 

2. Make prepayments 

During the tenor, you can also make some prepayments to bring down the outstanding amount. Once done, the home loan interest charges will also reduce. It will help you to repay lower home loan EMIs. 

3. Shop around 

You should compare all available home loan offers of lenders. You should choose the best one matching your needs and repayment budget. The facility could be availed on a third-party website for free. 

4. Pay more as the down payment 

A lender will not sanction the entire cost of your new home as a loan. You have to manage 15-20% on your own. It is known as the down payment. The higher you pay; the lower will be your borrowable amount. In turn, you have to manage lower home loan rates and EMIs. You can always use the home loan EMI calculator and know an amount you will pay over a tenor. It will ensure that you can indulge in proper financial planning.     

5. Opt for a home loan balance transfer 

Existing borrowers looking to reduce their home loan interest outgo can switch their loans to a lender offering a reduced rate. It is known as the home loan balance transfer. You can also enjoy a top up loan with a significant amount, restrictions free usage, reduced interest and tenor like your ongoing loan. 

You can consider one of the tips and lower down your payable home loan interest charges and save.

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Amazing Tips to Reduce Your EMIs on High paying Home Loan

Are you paying a higher home loan EMIs affecting your outlays? 

A home loan is a long-term obligation that helps a considerable amount to buy or build a new home. 

But if you are managing higher housing loan EMI, you don’t have to worry. It is because it is possible to reduce home loan EMI by following a few tips. 

Read on this quick post!

1. Go for a higher down payment 

When you apply for home loans, you will not get the entire value of your new home as the loan amount. The maximum you can get is 75-80%. The rest has to be arranged on your own and known as the down payment amount. Hence, if you put down more than the regular amount, you will need to borrow less. A lower borrowing amount means you can reduce home loan EMIs considerably. 

2. Make regular part prepayments 

If you already have an active home loan account, you can still reduce home loan EMI. It is by making time-to-time part prepayments. You should do that during your initial loan tenor so that you can pay off a large interest amount. Before doing that, you should check if your lender charges any amount for making part prepayments. 

3. Opt for a home loan balance transfer

If you see a really good offer from a lender providing you with a lower rate of interest, you should switch your loan account to it. This facility is known as the home loan balance transfer. This way, you can bring down your EMI amount and also save on interest charges. 

Other than these tips, you can also go for Pradhan Mantri Awas Yojana (PMAY) if you are buying or building your first-ever pucca home. 

It can help you pay reduced EMIs because you can get an interest subsidy on home loans up to Rs.2.67 lakh as per your eligibility.

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Follow These Easy Steps to Reduce Your Home Loan EMI in 2021

The process to compare different lenders and opting for the lowest interest rates is inevitably the modus operandi of most borrowers while availing a home loan. In order to help prospective borrowers out, most financial institutions offer a home loan EMI calculator where one can check the EMI payable beforehand and check if the same matches his/her repayment capacity. 

In case you think that the Equated Monthly Instalments will put severe stress on your budget, consider following the below-mentioned options to reduce your EMI. 

• Negotiate home loan interest rates: Since this factor directly impacts your loan EMI, it is important to negotiate and choose the right interest rate to facilitate easy repayment. In this case, borrowers availing the loan on floating interest rates automatically benefit from the reduction in market rates. 

• Opt for a longer loan tenor: Even though opting for a lengthy tenor increases your total interest outgo, it also reduces the home loan EMI. It is wise to make use of the online home loan EMI calculator to find a suitable loan tenor that makes your repayment process convenient. 

• Pay more as a down payment: Consider making a hefty down payment as it can reduce the amount availed as loan, and consequently the EMI as well. Also, paying a higher amount as a down payment not only reduces your EMI but also ensures fast approval.

• Choose home loan balance transfer: In the case of existing borrowers, a home loan balance transfer is a great way to reduce your monthly financial burden. Find out which lending institution is offering the lowest interest rate at that moment and transfer your loan. 

Both the rate of interest and loan tenor play significant roles in home loan EMI reduction; therefore, it is wise to pay attention to the factors associated with them. Consider comparing different deals offered by financial institutions and use the home loan EMI calculator to plan your repayment at the very onset.

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Step by Step Guide for First Time Home Loan Borrowers

Purchasing a home requires borrowers to a vital financial decision, and availing a home loan helps to fulfil this dream. Nonetheless, first-time homeowners often get confused about how they should make the most of availing these funds. 

Following is a step-by-step guide to help homeowners to make an informed decision. 

Step 1: Check the home loan EMI, eligibility, etc.

The first factor new home loan borrowers should check is the EMI payable and eligibility criteria to guarantee approval. In this regard, they can also use a home loan EMI calculator that computes the monthly instalment amounts efficiently. 

Step 2: Check the approval status of the property 

The property one is buying should have a proper and valid registration in the seller’s name. Depending on this factor, lenders approve the loan. 

Step 3: Choose an interest type 

Home loan interest rate is another crucial factor that borrowers will need to consider. Depending on the requirements, they can choose between fixed and floating interest rates. Since it determines the EMI component, borrowers need to be careful while making their decision. 

Step 4: Consider pre-payment and other charges 

Besides choosing housing loan rates, individuals also need to consider different charges that lenders often levy under various instances. For instance, pre-payment, foreclosure fees, etc., are some of the charges that borrowers need to pay. 

Along with that, they also need to know the documents required for home loan. It will expedite the loan verification process. 

Step 5: Choose a lender 

The last step comprises choosing the right lender. Borrowers need to compare home loan rates before settling for one. 

Therefore, following these steps, a first-time homebuyer can avail a housing loan and effectively optimise their borrowing experience. 

Read More: Documents Required for Home Loan Refinance

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4 Factors That Can Affect Home Loan Interest Rates

 

While home loan interest rates in 2021 have been reduced to their historic lowest, there are several factors that borrowers must account for to enjoy a minimal cost of borrowing.

A host of parameters are taken into consideration which are calculating the home loan interest rate. Given that it is one of the biggest financial commitments that you would be making in your life, it would help you to get the most out of a home loan if you are aware of these factors -

1. Loan amount 

Most financial institutions levy a higher interest rate for a larger loan quantum. Hence, it is advised to make a higher down payment on your housing loan if you want the monthly instalment outgo to reduce. 

2. Credit score

Application for a home loan will only be considered if the borrowers' CIBIL score is 750 or above. With a high credit score, there is a greater chance of loan approval at a lower rate of interest. The same is also applicable if you are applying for a home loan with a co-applicant having a high CIBIL score.

Incidentally, if you apply for a home loan with your spouse, you are also eligible to enjoy home loan interest tax benefits.

3. Loan to value ratio

The loan to value ratio or LTV is the percentage of property value financed through the loan amount. The remainder has to be funded out of the borrower's pocket. 

As per the RBI circular, the LTV is capped at 75% for a loan amount upward of Rs.75 lakh. Accordingly, the interest rate charged is also high. You can use a home loan EMI calculator to determine your monthly outgo to avail such a loan amount. 

4. Type of rate of interest 

Borrowers can opt for a fixed rate or floating rate of interest for a home loan. For a fixed-rate loan option, the interest levied is higher owing to a higher risk to lenders. 

One must note that these factors that impact home loan interest rate will vary from one lender to another. Find out the applicable factors to avail the best interest rates. 

Read Also: Know the Benefits of using Home loan Calculator

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