From 2015-2020, the per square feet rates of properties in Bangalore have increased significantly and now lie between Rs.4,200- Rs.7,500/ sq. ft., posing a considerable challenge for home buyers. To reduce the financial burden and hassle of making a hefty upfront payment, a home loan has always been one of the best financial solutions for property buyers.
However, a home loan is a long-term commitment and requires considerable budgetary planning to avoid defaulting. Therefore, the primary matter of concern for most home loan borrowers is the interest rate, as it directly impacts EMIs.
In the following section, we have enlisted some essential factors that impact the interest rates of home loan in Bangalore and other Indian cities.
Ways to lower the interest rates of home loans in Bangalore
Prospective housing loan applicants who are wondering how to reduce home loan EMIs must check these points and plan out their home loan application process accordingly to reduce the interest rates.
● Reduce the loan quantum
As per RBI recommendations, financial institutions can finance about 75-90% of a property’s value as a loan. Property buyers, therefore, have to pay the remaining amount at the outset to apply for a housing loan.
Now since a higher credit amount increases the risk of lending, financial institutions mostly charge higher interest rates from the buyers. Therefore, prospective home loan applicants must pay at least 20% of the total valuation up-front to secure low-interest rates on their housing loans.
● Possess a high credit score
The credit score is one of the significant determinants of home loan interest rates. Financial institutions give due importance to an applicant’s credit score to assess his/ her repayment capacity and creditworthiness.
Lenders of home loan in Bangalore mostly offer low-interest rates to applicants who have a credit score of at least 750 or higher. In order to maintain a high credit score, it is essential to review credit reports at regular intervals, pay all the credit dues on time and pay down the credit card balance so that your overall credit usage is low.
● Choose between floating and fixed interest rates wisely
A floating interest rate is one that is variable and largely increases or decreases with the rise and fall in the base rates. Fixed interest rates, on the other hand, remain fixed for the entire repayment tenor.
Generally, floating interest rates are about 1-2% lower than that of the fixed interest rates, and applicants can further enjoy an advantage if there is a dip in the base rate. However, the floating interest rates are subjected to rise if the base rates increase, and that may become a matter of concern. Therefore, it is extremely crucial to choose the type of interest after thorough market research and analysis.
Also, for further benefits, applicants must check the pre-approved offer extended by leading financial institutions to skip the hassle of the documentation process. This pre-approved offer is available on a number of products like home loan, loan against property etc. It can be easily checked by providing the name and contact details of the applicants.
Availing a home loan is not an easy task, and it requires a great deal of financial planning. Given that these loans are borrowed for a longer tenor and in a larger amount, thorough and careful budgetary planning is required to avoid repayment hassles in the long run.
Therefore, prospective home loan applicants must meticulously follow the points stated above to avail an optimum home loan interest rate that will not affect their repayment capacity in the future. They must also use the home loan EMI calculator to gauge their repayments before applying.
About The Author
Stephanie Braga
Hi, I am Stephanie Braga. A professional blogger and content community manager on this platform. I love to write and post content on different niche. Contact me, if you need any help related to digital marketing or content marketing.
