Factors That Can Help Select Best Current Loan Interest Rate

home loan in India

They say home is where the heart is; your home is one place of comfort where one can go after a day full of work stress and turmoil and relax & forget all your worries. Thus, people often look for their dream home for their own comfort and happiness. But, in a country like India, buying a home is not easy as real estate prices are high here. If you do not have the money to buy the home you want, then a home loan is one of the best options available today.

The young working professionals wanting a home of their own early in their life have given rise to multiple institutions offering home loans in our country. The question is how to choose the right lending institution for your dream home from so many? If you are a first-time buyer, you need to know more about home loan in India before diving into one. One of the key factors to keep in mind is that you must always try to go with the lender offering the lowest home loan interest rate as even a decimal point difference in the interest rate offered can lead to you saving or losing big in the long run. In this article, we give you some tips on how to get the best home loan interest rate in India.

Tips to Select the Best Current Home Loan Interest Rate in India

  1. Understand What the Market Has to Offer –To understand what interest rates are on offer in the market, you could visit the websites of the lenders/banks/institutions. Collecting and comparing information on interest rates, other charges, and terms and conditions can be rather cumbersome for the borrower, so one could visit the website of a lender to compare different charges, rates of interest, loan amounts, and other terms and conditions applicable to your loan requirement. While aggregators help with relevant information in one place, you can also seek professional advice.
  2. Keep an Eye on The MCLR Rates – MCLR is the Marginal Cost of Funds based Lending Rate. This is the lowest interest rate at which a bank can lend money to a borrower. There is an annual reset date for the MCLR during which all banks review the rate for existing home loan applicants. This MCLR remains applicable until the next year’s reset date, even if there are changes in the MCLR in between. This means that the interest rate on home loans can increase or decrease based on the changes in the MCLR rate. So, keeping a keen eye on the MCLR rates while taking a home loan can give you the best home loan interest rates.
  3. Select Lenders Giving Special Interest Rates to PSU Employees – There are lenders/institutions that offer employees from PSU or reputed companies home loans at competitive interest rates. Since these are not open for all, keep this in mind and discuss it with the lending institution thoroughly while selecting lenders for a home loan. Ultimately even a marginal difference in the rate can be helpful for the borrower in the long run. 
  4. Enhance Your Credit Score for Better Interest Rates – If you have a 750+ CIBIL or credit score, your home loan eligibility calculator is positively impacted and lenders view your home loan eligibility more favourably. Hence, as a borrower, it is best to improve your creditworthiness before applying for a low-interest home loan.
  5. Consider A Female Applicant – Did you know that many Banks/lenders provide special concessions in interest rates to women home loan applicants? Check with the lending institutions to know if making a female the primary applicant can help you get a lower housing loan interest rate.
  6. Opt for Home Loan Balance Transfer – A home loan can be transferred from one bank to another. This facility allows anyone with an existing home loan in one bank to transfer the remaining amount to another lender offering more favourable terms (lower interest rates). Home loan balance transfer is a great way to avail of a lower home loan interest in the middle of your tenor. As a borrower, one must be aware of this facility to enjoy the benefit of lower home loan interest rates.
  7. Look Out for Promos and Offers – Financial institutions and banks often try to attract their customers with new offers daily. As a borrower, always keep your eyes and ears open for any such festive season offers, lender tie-ups or special promos when opting for a home loan. These offers often provide you with a slightly better home loan interest rate than the normal market rate and it could prove financially beneficial for you.

Summing Up

There are several banks and lending institutions offering home loans in India but as a borrower, one must be aware of ways to choose the one that offers home loans at the best rates in the market. The above-shared tips can help the home loan applicants/borrowers select the best home loan interest rates and thus, save on loan interest while enjoying the home of their dreams. So, be an informed decision-maker while selecting a lending institution for your home loan and enjoy the benefits of lower interest rates on your home loan EMI and eventually save up this money for the foreclosure of the loan. 

Also Read: Tax Benefits of Availing of a Second Home Loan in India

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