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4 Must Know Things about Home Loan Interest Rates

Buyers of home do a lot of research about the whole process to be ready and ensure a smooth course of action. They also gain a lot of information about different loan options and the interest rates that various lenders off. While trying to know about everything involved in purchasing a property, buyers usually miss out very important facts and information about the interest rates which had to be acknowledged before signing a loan deal. The following are 4 vital aspects that buyers should not ignore to know about the rate of interests that come with the loan:

Rate of interests can be negotiated:

Before applying for the loan formally, you can always negotiate and get a better deal for interest rates. Ask other lenders and inquire their policies before taking a firm decision. If you do this well, you can always mention other offers and deals that you got from other lenders to the current lender. Having a very good CIBIL score can also help you to strike a favorable deal with the lender. I did this when I was about to purchase a villa for sale in Chennai on a home loan and having information about other lenders and their housing loan deals allowed me to negotiate and get myself a good deal.

The Equated Monthly Installments stays the same:

If your lender gives you the advantage of a lower rate of interest after assessing your documents, even then the EMI rate stays the same. Instead of decreasing the EMI, the lending bank increases the principal levied as a part on each EMI and the buyer can save a few EMIs in the total loan tenure. By paying increased principal, you can enjoy lesser interest rate for the loan repayment tenure.

CIBIL score determines the interest rates:

Loan applicants with a good CIBIL score of more than 750 have very good possibilities to get the home loan sanctioned by the lenders. A loan amount of 80% of the property cost is provided with a rate of interest of 9% to 11%. If the score is lesser than 700, the interest rates would range from 11% to 15%. For loans that are applied against an already owned property, the rate of interest can go more than 18%. However, these numerical are only applicable for secured loans and for unsecured ones the rate of interest can go on to a whopping 26%.

To know more about CIBIL score and the myths regarding the same: Read the article here

Rate of interests can be altered after a while:

When you sign the agreement with the lender, there would be a reset clause which lets the lender to alter the rate of interest after a 2 to 4 year period. If the loan is applied on a floating rate of interest, the lender can change the rate in each quarter. As the fixed rate is higher than that of the floating interest rate, most banks do not offer loan on a fixed rate for a specific time period and they look to alter this rate according to the market trends.

Without financial aid like home loans, the process of buying a home has become much easier for the end users or investors. When the project also has banking partners to help with the same, it shows that the project is legally sound and has all the approvals that are necessary. With all this in mind, it is a great idea to check online and with the experts to identify the best deal that would work for you. This would allow you to save a lot of money in the future with just little effort before jumping into a decision.


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