To get low interest home loans, keep an eye on what’s going on in the financial world. The Reserve Bank of India obligates banks to tie interest rates on floating-rate loans to an external benchmark, like the repo rate. Several repo rate-linked loans, mainly from government banks, have now been created.
Here are tips to avail low interest home loans:
- Compare your options with those of other banks-
Examine interest rates and the cost of refinancing the loan. The new lender will charge processing fees, legal fees, and a percentage of your loan balance. Compare these fees to the amount of money you’ll save on interest throughout the life of the new loan. Consider switching if the net gains are significant, as they were in the first half of the loan term. Shortlist 1-2 possibilities carefully and apply for the suitable one.
- Consult your lender about your alternatives-
Inquire with your lender about what may be done if your interest rate is too high and if it can be reduced. After paying a handling fee, the lender may offer to lower your rate. Your rate may be more than repo-linked rates if your loan is still related to the base rate. If you have a bank loan, try switching over to a repo-linked loan, which has lower interest rates and gives you full credit for RBI-mandated cuts.
- Take a look at the interest percentage on your loan-
Check the current interest rate you’re paying. The amount of your loan, the loan-to-value ratio, your gender, your source of income, and your credit score all go into determining your interest percentage. Examine the market for loans for options that are similar to the one you have now.
You might just be a salaried man with a loan amount of Rs. 55 lakh and a credit score of above 750, for example. Figure out how much of a difference there is between the advertised rates and your current rate.
- Consider what are you able to save-
Consider a home loan of Rs 50 lakh for 20 years at a rate of 9.1 per cent a year ago. However, several banks are now promoting lending rates of less than 8.5 per cent. The loan amount would be roughly Rs 49 lakh after 12 EMIs.
The total interest would be Rs 52 lakh if the rate were constant at 8.8% for the next 19 years. However, if the claim was paid at a steady rate of 8.2 per cent, the interest would be Rs 49 lakh, saving Rs 3 lakh or about 7 EMIs through the entire loan term. As a result, lower high rates by repaying low interest home loans.
Consider making frequent pre-payments when you get low interest home loans. Prepaying your house loan at a low-interest rate has a bigger influence than paying beforehand at an increased rate.