- Research about multiple lenders helps to make an informed choice
- A healthy credit score ensures loans on competitive interest rates
- Floating interest rates are better than fixed rates
- Enjoy benefits such as top-up loan and principal holiday period
As home loan interest rates have started tightening following RBI’s decision to hike repo rate, the rate at which it lends money to banks, first-time home loan borrowers are busy chalking out plans to zero-in on the lender offering the best rates. If you are also looking forward to applying for a home loan, this handy guide would aid you in the borrowing exercise.
This is the first step to avail home loan at a competitive interest rate. While banks continue to be the most preferred sought-after lenders, the evolution of non-banking finance companies (NBFCs) has radically changed the lending landscape. Today, you can avail a home loan even from NBFCs.
With multiple loan aggregator websites, you can easily compare the current home loan interest rates from various lenders and choose the one that best suits your requirements.
Maintain a Healthy Credit Score
For availing any loan, credit score plays a vital role. The three-digit score, from 300-900, reflects your creditworthiness and prudence with money management. The higher the score, the better chances you stand to avail a loan at a lower interest rate. Paying bills and EMIs on time ensure your credit score doesn’t take a dip.
Before making a home loan application, make sure you personally check your own score. Note that you can check your credit score for free once a year from the four credit information companies in India – TransUnion CIBIL, Equifax, Experian and HighMark.
Opt for Floating Interest Rates
You can avail a home loan either on fixed or floating interest rates. The rate of interest on fixed rates remains same throughout the loan tenor. On the other hand, interest rates on home loans acquired on rates change according to the market dynamics.
Also, floating rates are slightly lower than fixed rates and even if they go higher than fixed rates, it’s not for the entire loan tenor, but for a period of time. Additionally, there are no prepayment penalties on loans availed on floating rates.
Flexible Repayment Tenor
The tenor plays a crucial role in the borrowing exercise. Home loans are long-term commitments where you need to pay regular EMIs for 15-20 years, or even more, at a stretch. While a long tenor brings down the EMI amount, it pushes up the interest outgo. On the other hand, a short tenor might result in a high EMI but keeps a tight lid on the interest outgo.
Therefore, it’s essential to opt for a lender offering flexible repayment tenor. This ensures easy repayment thereby making sure your EMIs are spread as per your cash flows. For instance, Bajaj Finserv Home Loan offers flexible tenor ranging up to 240 months that help you in easy repayment.
With this home loan calculator, you can know the EMIs you need to pay every month on your home loan.
Look for A Loan Offering Added Benefits
While low-interest rates and flexible repayment tenor are some of the major benefits you must look into before availing a home loan, you must also look out for added benefits of the loan such as principal holiday period, top up loan and easy balance transfer facility among others. These added benefits go a long way in ensuring savings in the long-run.
For example, Bajaj Finserv Home Loan offers all the above facilities to potential borrowers. Additionally, home loan borrowers get a value-added service known as Property Dossier which guides one through all the legal and technical aspects of owning a property. This service further aids borrowers in making an informed choice.
With pre-approved offers from Bajaj Finserv on a gamut of loans including home loan, availing finance is quick and easy. It cuts down lengthy paperwork. To know about your pre-approved offer, share a few basic details.
Buying a home is an essential financial goal for individuals. Availing a loan for the same is recurring liability that needs to be addressed for many years. An essential exercise, it must be done with due diligence.