A home loan is a significant undertaking that can substantially impact your finances in the long run. Thus, it is imperative that you understand the borrowing terms and make an informed decision when availing of credit.
Try and Avail of the Lowest Possible Home Loan Interest Rate
How your home loan interest rate affects your interest outflow
Home loan interest rate is the rate at which a lender extends credit to you for a predetermined period of time. In the case of a housing loan, interest is compounded monthly; thus, your total interest outflow on a sum can be sizeable.
For instance, if you avail of a home loan worth Rs.50 Lakh for a tenor of 20 years at an interest rate of 8.50% p.a., your total interest outflow over the years will be Rs.54.1 Lakh.
As is evident, the cost of borrowing is substantial in the case of a home loan. The simplest way for you to make your loan repayment easier is to avail of the lowest possible interest rate. Even a small difference in your interest rate can substantially affect how much you end up paying in absolute terms.
For instance, in the above example, let’s say the interest rate reduces to 7.50% p.a. Now, your total interest outflow for a home loan of Rs.50 Lakh with a tenor of 20 years would be Rs.46.7 Lakh. Thus, with a difference of 1% in your home loan interest rate, you stand to save Rs.7.4 Lakh or over 13% on your interest outflow.
To know more and better compared your interest outflow in different scenarios, calculate home loan EMI with an online home loan EMI calculator.
Apply for the most competitive interest rates
When looking to apply for a home loan, compare offerings across leading lenders and apply with one offering the most competitive interest rates. For instance, Bajaj Housing Finance Limited offers one of the most competitive interest rates at present. The lender’s current interest rate on home loan for salaried and professional applicants starts at just 7.20%* p.a.
Do note that the final interest rate offered to you depends on your income, financial, credit, and employment profile. Thus, make sure you enhance your profile and take the necessary steps to be offered competitive terms. For instance, you can work to enhance your CIBIL score and reduce your existing liabilities before you apply.
Transfer Your Existing Home Loan for Better Repayment Terms
Negotiate a lower interest rate
If you have an existing home loan, you can stand to avail of a lower interest rate and save on your interest outflow in the coming years by opting for a home loan balance transfer. Under this facility, you can transfer the balance amount on your home loan to a new lender for more competitive borrowing terms.
Here too, the interest rate offered to you by the new lender will depend on your income, financial, credit, and employment profile, and, of course, the prevailing market scenario. When opting for a balance transfer, you also have the option to renegotiate other home loan terms and avail of additional credit for other financial needs.
Reassess your repayments tenor
While there is no such thing as an ideal home loan tenure, you may find that the tenure you had chosen earlier is no longer suitable for you. For instance, you may now have surplus funds every month that you would like to earmark towards repaying your loan earlier. Alternatively, you can choose a longer tenure to get some breathing room in your EMI. Either way, you have the choice to reassess your repayment terms for your benefit.
Before you apply for a balance transfer, it is essential you compare offerings in the market and opt for a lender that is offering the most competitive terms. For instance, Bajaj Housing Finance Limited offers salaried and professional borrowers the option to transfer their home loan for an interest rate starting at 7.35%* p.a. Those eligible can also avail of a top-up loan to the tune of Rs.1 Cr* or even higher for any other financial needs.
*Terms and conditions apply
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