FindItMore | Home loans allow you to own your dream home without putting a strain on your finances. Since the price of houses run up in lakhs, affording a home entirely on your own funds is not usually possible. Home loans come to your rescue in such situations. These loans allow you the necessary funds required to buy a home or a plot of land. You can avail a high amount of loan through home loans and then repay the loan slowly through monthly EMIs. However, just like other loans, home loans interest rates. These rates increase the repayment amount of the loan as you have to pay the principal as well as the applicable rate of interest. The interest rates depend on the lenders and usually start at around 8.50% per annum. However, there are tips which let you lower the home loan interest rates and make them more affordable. These tips include the following –
- Check the loan eligibility and the EMI before applying for the loan
When you avail a home loan online, there are loan eligibility calculators as well as EMI calculators. These calculators help you calculate the amount of home loan for which you are eligible and the EMI payable for the said amount of loan. You should use the calculators to calculate the loan amount and the EMI. You can then decide on the most affordable amount of loan whose EMIs would be easily repayable. If you apply for the loan knowing your affordability, you would be able to avail an affordable home loan rate and repay it easily.
- Shop around
Always compare home loan rates offered by various lenders before you avail of a home loan. Since the interest rates differ across lenders, comparing lets you shortlist the loan which would give you the lowest and the most affordable interest rate. There are online loan aggregators which make the process of comparing easy. You can visit the website of such aggregators to look for loans offered by different lenders along with their respective interest rates. You can then choose a lender who offers the lowest rate on your home loan.
- Make a higher down payment
Home loans are not allowed for the entire value of the property you are purchasing. You get a loan up to 90% of the property’s value and the rest is payable by you as a down payment. If you make a higher down payment, your home loan interest outgo reduces. Since the loan amount is reduced you have to pay interest on the reduced amount which lets you save on the interest payments.
- Check if the property is approved by lenders
Lenders have a list of approved projects and builder properties. Before you are buying a property, check to see whether the property has been approved by the lenders or not. If the property is approved, home loans would be available easily for buying the property and the interest rates would also be low.
- Check the type of home loan rate offered
Interest rates on home loans come in two variants – fixed rates and floating rates. Fixed rates remain fixed throughout the tenure of the loan while floating rates change with a change in the macroeconomic interest rates. Fixed rates prove to be costlier than floating interest rates. So, when availing a home loan, go for floating interest rates as they would have low interest pay-outs and prove affordable.
- Opt for balance transfer
Home loans allow you the facility of transferring your existing home loan balance to another lender. This is called balance transfer. If you find a lender who is offering you lower interest rates than those which you are being charged in your existing home loan, opt for balance transfer. Balance transfer is recommended in the initial years of the home loan which promise the highest saving in interest outgoes even after the charges incurred in balance transfer.
If you follow the above-mentioned tips, you would be able to enjoy affordable home loan rates and become the owner of your own home without hurting your finances.