April 22, 2024

Business and Finance Blog

My WordPress Blog

Do Revised Home Loan Rates Benefit the Home Buyers? Truth Revealed!

Home Loan

827 Views

With the current real estate prices being so expensive, buying a house without any financial support is something that is very rare. Most people apply for home loans for financial assistance. If you are planning on buying a house, it is natural to first go through the home loan plans out there to figure out a deal that is most suitable to your budget. Now, you might be worried about the home loan interest rate making the loan’s repayment a challenge. Every borrower watches the interest rate of a home loan closely. This comes as no surprise since the home loan rate can be responsible for significantly affecting the monthly instalments of a home loan.

Let’s understand how revised home loan rates can benefit borrowers:

A change in the interest rate brings down the home loan EMIs

There have been borrowers that have struggled with repaying the monthly instalments of their home loans. Now, one reason is that the interest rate is too high. But if they were to refinance their home loans, the new lender might offer them a lower housing loan interest rate. By getting a reduction in the interest rate, their home loan EMIs would get reduced. This will help make the repayment go easier.

You can get a better repayment plan

When it comes to home loans, most financial institutions offer borrowers a maximum tenure of 20 years for repayment. Now, most borrowers opt for the longest tenure possible as this keeps their EMI payments to a minimum amount. However, interest is added with each monthly instalment, adding to the overall cost of the home loan. Cutting down the number of monthly instalments can actually help in saving money by not letting the interest gather. If you are to get a lower interest rate, it can be possible to choose a shorter tenure as the EMIs are reduced with a reduced interest rate.

To get better home loan interest rates, you can always choose to opt for a home loan balance transfer. This involves transferring the outstanding loan amount to another lender for a lower interest rate. If you are yet to apply for home loan, here are a few tips to keep in mind:

Keep a good credit score

Credit scores are always checked by every financial institution before they approve a home loan. Lenders prefer borrowers with credit scores of 750 or more. In order to attract such borrowers, they offer great deals on home loans that include low interest rates. This is why it is best to maintain a good CIBIL record.

Have a stable employment record

Any lender would be apprehensive of offering a home loan to someone who does not have much stability when it comes to his or her employment record. Working in the same organisation for a couple of years indicates stability and a regular flow of income, which assures the lender that you can repay the loan on time. This can be a contributing factor to the lender offering a competitive home loan interest rate.

Therefore, this is how a revised home loan rate can prove to be beneficial to a borrower. Make sure to use a home loan EMI calculator to understand whether the revised interest rate makes the home loan EMIs affordable.