The majority of property loan consumers are constantly searching for methods to lower their mortgage loan interest rates and equivalent monthly instalment expenses. There are several methods to get a lower interest rate on your property loan. Although numerous lenders offer property loans, their interest rates vary significantly. You will likely be paying a higher EMI because your loan is not from a lender offering competitive rates.
Review your mortgage loan interest rates to see if your lender charges you more than the EBR allows. The only expense will be the fee imposed by the new lender. This is because the majority of property loans are made on a flexible rate basis, and there is no penalty for switching your loan. A balance transfer can enable you to reduce your EMI if you receive a competitive interest rate on your property loan.
The interest rate on your property mortgage loan is one of the most important factors in determining your loan’s affordability. Reduced property loan interest rates make it easier to pay off the loan quickly and without worry while also keeping EMIs on the lower side. There are some methods of how to lower the interest rate on your property mortgage loan. But let’s first comprehend the many kinds of interest rates that Indian lenders offer.
Several interest rates provided by lenders in India:
Interest is typically offered in India in two ways.
A). Fixed interest rate-
A property loan’s interest rate doesn’t fluctuate over the tenure of the loan in accordance with shifting market conditions under the fixed interest rate method. The ease of financial planning is the main benefit of choosing this type of interest rate. Borrowers can adjust their other costs and monthly budget because they know their monthly EMI in advance.
B). Floating interest rate-
Mortgage interest rates that change are based on external market conditions. Your ongoing property loan’s interest rate and EMIs rise as the property loan interest rates on the market rise. Conversely, your EMIs will also decrease as interest rates on property loans on the market decrease.
The floating interest rate is one of the two forms of interest rates that are negotiable. Let’s explore six strategies for getting the best interest rates, especially when applying for property loans.
1. Research for the best deals on interest rates-
You must pass the eligibility for mortgage loan to get a lower interest rate. You should speak with different lenders who will give you a loan against property. You’ll undoubtedly locate one that offers you the best interest rate. You shouldn’t expect a significant difference in their services. Most lenders still base their interest rates on widely used variables like credit scores. So, go with the lender giving the lowest interest rate together with additional benefits and features, such as flexible loan pre-payment terms, etc.
2. Maintain a good credit score-
A high score proves that you are a trustworthy and creditworthy borrower. This is the most crucial criterion of eligibility for mortgage loan. Also, having a high credit score gives a person strong negotiating leverage. As a result, consumers with credit scores above 750 are eligible for the most excellent mortgage offers at the lowest interest rates. Clear EMIs on time, pay all bills on time, pay more than the minimum on your credit card, and periodically check your credit report.
3. Make sure you are eligible-
Use a mortgage loan eligibility calculator to see if you meet the eligibility criteria set by the lender. You may get a lower interest rate if you meet all eligibility requirements. A lender sees you are a creditworthy borrower if you pass the eligibility requirements. There are credit score ranges, age limits, minimum income limits, etc., in the list of eligibility criteria. A mortgage loan eligibility calculator is a free online tool provided by reputed lenders like Bajaj Finserv.
4. Make pre-payments whenever possible-
You are always free to make partial payments if you are a borrower paying off a mortgage loan with floating interest rates. You can do the same without incurring any additional fees if you are paying off a loan with fixed interest rates. Hence, try to make a partial payment whenever you receive a bonus. Your principal amount, total interest expense, and, consequently, the effective interest rate will all decrease.
5. Increase your EMIs with time-
You can also lower the overall interest expense by raising your EMIs. You can increase your EMI amount throughout the initial years with a yearly increase in your income. By doing this, you might not be able to lower the interest rate, but you will save money on interest costs of your mortgage loan.
6. Opt for mortgage loan balance transfer-
You can choose a mortgage loan balance transfer if you believe your present EMIs are becoming unaffordable for you. A property loan balance transfer program enables borrowers to move their outstanding property loans from one lender to another. The new lender must provide them with better terms and lower interest rates. Occasionally there are significant fees associated with property loan balance transfers. Therefore one should only use this option after careful financial planning.
