Home Loans can play a vital role in a person’s life while buying a house. It can help him overcome the financial gap of insufficient funds. It is easy to get your Home Loan sanctioned, but then you might face some problems from your Home Loan due to the factor like interest rates. Interest rates are an important part of loan products and can impact your final repayment amount for the loan, and a high-interest rate would make you pay more than expected in the end.
Due to the reforms made by the Reserve Bank of India (RBI), the lending rates have fallen significantly. With the reduction of Repo rates, the lenders have reduced their lending rate but have kept them slightly higher than the repo rates. Which means there is a slight chance of getting a reduction in your interest rates when you apply for a Home Loan. To get a lower interest rate, you need to keep the following things in mind:
- Documents: The lenders refer to documents like credit reports and your income proofs for credibility. If you have a high credit score and income, you can negotiate the interest rate on the basis of high credibility or repayment security. The property valuation and down payment offered can also help in interest rate reduction.
- Research lenders: There are different lenders in the market, and each lender has different lending policies. You can research the market and look for the lender that provides you best services as well as the lowest interest rates. You can also apply for a Home Loan from a Non-Banking Financial Company (NBFC) as they provide lower interest rates than most of the lenders in the market.
- Lower tenor: If you have a high salaried job that amounts to a high annual income, you can apply for a loan with a shorter tenor. A shorter loan tenor will reduce the total interest amount that you are supposed to pay with longer loan tenor, or if you have a high income, you can also negotiate on the interest rates offered by the lender on the basis of high-income proof.
- High down payment: Down payment also plays a vital role in the loan interest calculation, but it affects it indirectly. A high down payment will reduce the principal amount, and if the applicant is willing to pay a higher EMI, it can also reduce the tenor and end the loan soon. If you are ready to pay a high down payment for the loan, you can ask the lender to reduce the interest rate on the loan on the terms of repayment security.
- In favourable relations with the lender: Many lenders are known for providing lower interest rates to the applicants who are their old customers. So, if you are a frequent loan applicant from a single lender, then you can ask the lender to reduce the interest rates on the Home Loan.
You can try to negotiate for the reduction of interest rate from your lender, as you can save a lot of money with the reduction of the interest rate.