Factors That Determine Home Loan Interest Rates

Home loans are the most preferred form of borrowing when it comes to purchasing a house. The home loan eligibility and interest rate on housing loans can vary from time to time, and it is important to be aware of the latest home loan interest rates to make an informed decision.

Latest Home Loan Interest Rate

The interest rate on a home loan is determined by various factors. Some of the factors that determine the latest home loan interest rate include the loan amount, loan tenure, credit score, income, property value, and location. In India, home loan interest rates have been on a declining trend in recent years, thanks to the Reserve Bank of India's efforts to keep the economy afloat during the pandemic. The latest home loan interest rate in India ranges from 6.70% to 8.50%, depending on the lender and the borrower's eligibility.

How to Get the Best Home Loan Interest Rate?

1.Maintain a Good Credit Score

The first and foremost thing to do to get the best home loan interest rate is to maintain a good credit score. A credit score of 750 or above is considered good, and borrowers with such a score are likely to get the best home loan interest rates. If your credit score is not up to the mark, you can improve it by paying your bills on time, reducing your credit utilization ratio, and correcting any errors in your credit report.

2.Compare Lenders

Before applying for a home loan, it is essential to compare the interest rates offered by different lenders. You can use online home loan calculators to compare the interest rates and calculate the EMI payable for different loan amounts and tenures.

3.Negotiate with Lenders

Once you have shortlisted the lenders with the best interest rates, it is time to negotiate with them. If you have a good credit score and a stable income, you can negotiate a lower interest rate with the lender. You can also negotiate for other benefits like a waiver of processing fees or prepayment charges.

Final Thoughts

Apart from these factors, the latest home loan interest rate is also influenced by the economic environment. Lenders typically adjust their interest rates in response to changes in the repo rate, which is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks. The RBI uses the repo rate as a tool to control inflation and regulate the money supply in the economy