The home loan interest rate depends on various factors, some of which are as follows:
Interest Type- The most common types of interest rates are fixed and floating. While the interest rate on a fixed-rate loan remains constant during the term, credit options with floating interest react to changes in repo rates.
- Applicant’s credit history-
For house loans, clean credit history and a good CIBIL score have a positive impact on the interest rate. Applicants with a credit score of above 750 and a track record of timely repayment, for example, are more likely to be approved for a loan at a lower interest rate than those who have a history of late or defaulted payments. As a result, enhancing overall creditworthiness is the most effective way to achieve a lower home loan interest rate.
- Loan-to-value (LTV) ratio-
The percentage of the down payment made when purchasing a home has a significant impact on loan rates. Borrowers are typically required to pay at least 20% of the property's worth out of pocket by financial institutions. Individuals who make a larger down payment, on the other hand, reduce the required amount of money and qualify for a lower housing loan interest.
- Loan Tenure-
The amount of downpayment put on a house has a big influence on the interest rate. Borrowers are typically required to pay at least 20% of the property's worth out of pocket by financial institutions. Individuals who make a larger down payment, on the other hand, reduce the required amount of money and qualify for a lower home loan rate of interest.
- Applicant’s financial standing-
Applicants with a consistent income and solid employment are thought to be in good financial shape. In other words, when it comes to determining the optimum loan interest rates for different applicants, financial soundness is a critical consideration.
- Property location-
The location of the property in question also determines an applicant's home loan eligibility and, as a result, the interest rate he or she will receive. Property in prime regions with superior connectivity and amenities typically has a higher resale value. As a result, loan debtors are able to obtain loans with more favourable payback terms.
There are various Indian companies that offer the lowest home loan interest rates and provide various features including home loan balance transfer and top-up loan. Therefore, a person who wants to borrow a home loan should consider these Indian companies as a viable option.
Additional Read: Know how to Increase your Home Loan Eligibility
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