A lesser rate of interest on a home loan is possible on meeting the following conditions.
- Women Applicants: Several banks and housing finance companies provide a cheaper rate of interest to the women borrower. If the applicant is female then they can be offered a lower rate.
- Property Down Payment: As you would know that home loans are not financed fully, so you need to pay around 10%-25% of the property cost upfront. This portion is called as down payment. Loans upto 30 lakh, above 30 lakh-75 lakh and above 75 lakh generally account for 90%, 80% and 75% of their respective property cost. The more the loan quantum is the greater is the risk element. This means lenders will charge a higher rate of interest with the increase in the loan quantum. So, if you make a down payment more than what’s required, the loan amount will decrease and so do the risk quotient. This could make the lender ease the interest rate.
- Healthy Credit Record: As home loans are now priced on the basis of external benchmark such as the repo rate, the rate at which the Reserve Bank of India (RBI) lends to commercial banks, the need for a healthy credit record has become necessary. Lenders are introducing credit score-based home loan interest rates.
So, follow these points and get the cheapest home loan interest rate on your borrowed amount.