Home loan interest rates are what every borrower worries about. After all, this rate decides the ultimate cost of your home loan and who wouldn’t like a smaller price tag, right? That’s why the following article will provide you with some easy tips to deflate the rates applicable to your housing loan. Check it out!
1. Borrow as little as possible.
A general thumb rule when it comes to home loan interest rates is – the smaller the loan, the lower the interest rate. In fact, most lenders will have loan slabs that usually go like this: below 30 lakhs, between 30 and 75 lakhs and above 75 lakhs. The smallest loan slab usually has the lowest rates and it’s the other way round for the bigger loan slabs. So, if it is possible, save for a bigger down payment and better yet, try falling into a lower loan slab – it will help you unlock reduced interest rates.
2. Co-borrow with a woman.
Women borrowers get lower rates. Lenders provide them with rates that are usually 0.05% lower than rates for others. However, you can make use of this benefit too. All you have to do is apply for your home loan with your mother, sister, wife or daughter. This will give you access to rates that are 0.05% less than general rates.
3. Go for floating rates.
When applying for a home loan, you will be presented with 3 choices when it comes to the type of interest rate. They usually include fixed, floating and semi-fixed rates. Many opt for fixed rates as they stay constant through and through but you should know that floating rates are generally lower than fixed rates and if the market sentiments dips, so will your interest rates! Also, this is a little secret, but experts believe that home loan interest rates will reduce in the coming future, something you will greatly benefit from if you opt for floating rates.
4. Home loan refinance.
Another great way to get reduce your home loan interest rates is to refinance your housing loan. This is a process wherein you transfer your outstanding balance to a new lender and receive some benefit in exchange. This benefit is usually lower rates. Through refinance, which is also known as balance transfer, you get an amazing way to enjoy lower rates midway through your repayment process.
Though prepaying a home loan isn’t a method to reduce your interest rate, it will have the same effect a lower interest rate. This is because, when you prepay, the interest rate is calculated on a smaller amount. This will ensure you save money by paying less interest, plus you will get out of debt quicker!
We hope these tips help you save money and enjoy an easy repayment process. Remember that you can also save on taxes through home loan interest rates, so you don’t always need to bring down the rate to save on this expense. Good luck and all the best!