Home loans are one of the most significant loans that both positively and negatively impact the lives of borrowers. On one side, it helps the borrower build their dream house; on the flip side, the loan’s principal amount and interest rates add more to the financial responsibility.
When it comes to paying home loan interest, the rates can be pretty tricky, as they tend to differ from time to time. They can hike or even lay low as per the market rates, so any borrower needs to ensure that their mortgage loan interest rates always lie low. Via thorough research and planning, the borrower can ensure a low-interest rate for their home loan.
Things To Take Into Consideration To Ensure Low-Interest Rates:
- Opt for shorter loan tenures- As with shorter loan tenures, one gets lower overall interest payable, resulting in lower interest amounts.
- Opt for Prepayments – It will help lower the principal amount, as, during the initial years of your home loan, one pays more for the interest than the principal amount. As the principal amount comes down simultaneously, the interest rate comes down too.
- An increment of your EMI can also lower the interest rates- As with an increased EMI, your tenure decreases. Substantially the total payable interest rate against the loan comes down.
- Higher your down payment amount- Most monetary institutions finance 75% to 90% of the complete worth of the property. You are expected to contribute 10% to 25% of the leftover expense of the property. So paying more as down payments is a better alternative. The higher you pay as a down payment, the lower your loan amount, decreasing the interest rate.
These tips are subject to availability from one bank to another, but in maximum cases, banks do support these measures.
Another significant measure to gain the lowest housing loan interest rate is to transfer a home loan. The home loan balance transfer can be opted for by borrowers who feel that their bank charges higher interest rates. So the borrower can transfer his remaining principal amount to a different bank. However, it’s applicable only in cases where the borrower has started with the prepayments against their loan.
The Steps For Transferring A Home Loan Are As Follows:
- To start transferring the balance, you must select the bank first. The main criteria should be finding a lender providing home loans at a lower interest rate. Alongside this, you need to check different administrations or advantages you could acquire when you switch.
- Qualities to look for in your new bank or financial organisation:
1- Quick approval and disbursement feature.
2- Lower interest rates.
3- Should be open to customising Installment payment plans.
- Next, apply for the transfer process from your existing bank. Then you are free to initiate the home loan application process with your new money lending organisation. Now with several banks, you can quickly get done with this process via online mode.
- There are certain things you need to keep in mind while transferring your loan, like:
1- The remaining tenure of your loan- If your loan tenure is about to reach its end, there is little to no advantage to going for the transfer.
2- Your existing lender’s approval, without which the entire process will reap no result.
- A very significant step of your transferring procedure comes: from submitting all your documents to the new lender. These incorporate your fundamental KYC reports, rundown of all the documents from your previous bank, property details and documents, Credit Equilibrium Proclamations, and interest records.
- Wait for the final confirmation from your new moneylender after all the documentation process is done. Once the new moneylender sanctions the mortgage loan transfer process, it marks the end of your loan with the previous bank. You will now pay your loan’s interest rates to the new bank.
- Now you need to sign the new home loan agreement papers and start with your new journey. Make sure to read through all the loan transfer agreement documents.
The process is quite simple, and with digitalisation advancements, one can quickly get done with it through online mode. Just make sure to check in with your existing bank that they support this transferring procedure. Standing today, most banks do support it. However, it is better to be sure. For any further clarification to both the existing and future bank, it is best to contact their customer services.