Buying a house is one of the biggest financial decisions you can take. Even though one can have an adequate bank balance to pay the entire sum upfront, they opt for a home loan. There are several advantages to taking a loan to buy a house.
However, ill management of a loan will eventually result in paying hefty EMIs. This guide will discuss some tips on how to reduce the home loan interest rate. Moreover, we will also discuss how the LIC home loan interest rate can benefit homebuyers.
Here, we have listed 8 tried and tested methods which you may follow to reduce the loan amount considerably:
Generally, people tend to go for more extended repayment periods as they receive easily manageable EMI deals. But suppose you compare the total payable amount using an online EMI calculator.
In that case, it is clearly distinguishable how you have to pay a higher interest if you choose a longer tenure, say about 25 to 30 years.
Therefore, as you decide on taking a home loan, we recommend you weigh your options, see which plan suits your overall budget, and proceed accordingly.
Loan products are available with variable features in online marketplaces. For a new homebuyer, all the associated loan terms may seem to be overwhelming in the beginning.
However, it is necessary to stay calm and take expert help to understand the pros and cons of each plan to make a well-informed purchase. For instance, if you visit the official website of LIC, you can view all features of the LIC Housing Finance Loan.
It also enables you to check the LIC home loan interest rate, which remains consistent between 8.50% and 8.70% throughout the loan tenure.
Upon checking your credit history, if reputed lenders feel confident about your repayment capacity, they readily provide 75-90% of the property’s value as the loan amount.
If you pay close to 25% of the total property’s cost as a down payment, the interest rate will decrease automatically owing to less outstanding principal.
Thus it is a great strategy to lighten the repayment burden, although you should have the sufficient financial stability to furnish the maximum allowed down payment.
Increasing the EMI payments is one of the best ways to lower the interest rate levied on an approved home loan. Moreover, it saves you from feeling pressured due to a long-term commitment.
Though this measure may seem easy, it can affect your lifestyle quality if not adjusted with other budgetary elements. Hence, chalk out a rough estimation of all your expenses before finalising a monthly repayment budget.
Financial institutions offering home loans are open for negotiation with customers having healthy credit scores.
Therefore, if you meet all the eligibility criteria and boast a sound repayment track record, you can negotiate with the lender for better interest rates. Even a slight relaxation in the loan interest will be a significant rebate on the outstanding sum.
If you choose a lender offering floating-rate loans, you may settle the outstanding balance well before the end of your tenure. In addition, such loans do not attract any foreclosure charges and allow the borrowers to make surplus repayments from time to time.
Thus regular prepayments will help you reduce the home loan interest as you begin contributing actively towards the principal right from the beginning.
However, please note that banks or NBFCs offering fixed-rate loans charge foreclosure fees as a certain percentage of the furnished prepayment.
Hence, if you intend to benefit from this method, go through the loan repayment policy of your preferred lender and take a decision that best suits your needs.
Lenders are prone to approve home loan requests of buyers having a healthy credit score. For this reason, they are even ready to roll out preferential interest rates to ensure they enter into a credit relationship with a trustworthy borrower.
As an aware consumer, stay prepared to negotiate on even terms if you already have a substantial credit score of 800 or above. Again banks and NBFCs come up with festive offers. So keep checking their official portals and several marketplaces listing such lenders to grab the best deal available.
This should be the last resort for any homebuyer as faltering a monthly payment after opting for this scheme will attract heavier penalties.
A balance transfer is a method to transfer the remaining outstanding sum to another lending institution levying a lower interest.
One can apply for a home loan balance transfer only after they have started repaying their original lender for a year.
You can benefit from the competitive LIC home loan interest rate starting at 8.50% annually. Moreover, the eligibility criteria are much simpler.
All applicants must submit basic documentation such as an Aadhaar card, bank statements, IT returns, etc. If you are within 18 years and 60 years of age, then you can apply for a housing loan product with LIC.
Only pensioners need a guarantor to avail a LIC home loan where they can opt for a credit facility for even those up to 70 years of age. A LIC home loan is viable if you intend to get a home loan with attractive interest rates and a balance transfer facility.
Purchasing your dream house with the help of a home loan can be one of the best decisions of your life if you take care of the measures described above. Now, if you still can't afford to get your own house, you can opt to get apartments for rent in laredo tx.
Apart from all the above methods, having a stable job or business is also a crucial factor which lenders consider in the underwriting process. Hence follow a systematic approach to ensure your home loan process gets settled swiftly.
