Home loans are a favoured financial solution that offers substantial funds to borrowers to purchase a residential property. This credit form comes with extended repayment tenure, with attractive home loan interest rate, which further ease the borrowing process.
Top ten factors that affect a home loan interest
- CIBIL score
A borrower CIBIL score directly influences the home loan interest rate. An applicant with a 750+ credit score can negotiate with lenders to reduce EMI payment.
- Income stability
Salaried individuals are more likely to acquire housing credit at favourable rates when compared to others. Thus, your earning potential and stability matters when calculating home loan interest rates.
- Types of interest rates
Floating home loan rates keep changing as it is dependent on the market fluctuations. Floating rates are subject to market performance, and they can change over the repayment tenure.
- Gender
Lenders may offer you a concession of up to 0.5% on the applicable and latest home loan rates to women borrowers.
- Age limit
If you are young, then it means that you have more workable years left than someone nearing retirement. Besides the ability to opt for longer tenure loans, such applicants can also reduce home loan interest rate since risk of delinquency is limited.
- Value of your property
If your property is located in a growing area with the best amenities, it will carry a higher value than the one with poor connectivity and fewer facilities.
- Government subsidy eligibility
The Central Government is pushing for affordable housing via its lucrative Pradhan Mantri Awas Yojana scheme. You can enjoy deductions on the home loan interest rate for interest paid on home finances for affordable homes.
- Down payment
The higher your down payment; the lower the home loan rate you will need to manage to pay over the tenure.
- Employment type
Individuals employed with central Government enterprise or public sector, enjoy a lower home loan interest rate.
- LTV ratio
Loan to value ratio represents the value of the lent sum as opposed to the worth of the property in question. A high LTV would mean increased risk of lenders, thereby leading to higher rates and vice versa.
Keep such factors in mind when opting for a housing loan from reputed HFCs.
