Reduce home loan interest rate

Home loan rates are on the rise, but now you can get a cheaper loan with these 5 ways

The Reserve Bank has increased the repo rate by 0.90% in the last two months, due to which loan rates have started increasing. Home loans, which were available at the rate of 6.40 - 6.80% till two months ago, have now reached 7.30 - 7.70%. In such a situation, whether the loan is already running or you are about to take a new loan, the interest will increase in both the cases. So what can be done to lower the rates?

Ask your bank

If your loan is going on, then know from your bank or lending institution how the rising rate can be curbed. Many non-banking institutions give you a small processing fee, which reduces your interest. If you have a loan from a bank and you are on MCLR or Base Rate Benchmark, then know that the lowest rates are still on repo loans. Bank can give you repo loan by taking processing fee. If you are taking a new loan, then first check your pre-approved offers that your bank might have prepared for you. Every bank makes attractive loan offers for its best customers. You can get a little discount on these.

Check Discount

In the case of refinancing, many banks may offer a loan at a rate lower than their lowest advertised rate. You have to be eligible for the discount to get it. Often in the case of refinance or balance transfer, banks offer discount rates to attract new customers. If you are paying a very high rate on your loan, you can reduce it by refinancing. For example, a private bank is quoting its lowest rate as 7.60%, but in refinance case, it is also giving loan at 7.45%. This happens in many banks. Talk to the banks near you, what is the discount you can get.

Improve Credit Score

A good credit score is essential for getting cheap loans. Credit history is important for credit score. If there is no history, then you will not have a score and if you are taking a loan for the first time, then you will have to pay a little more interest. To avoid this, you can develop a credit score by taking a credit card, personal loan or BNPL before taking a home loan. Take your score above 750. Increase your score if you have an ongoing loan.

Connect women with loans

Many lenders offer their lowest rates to women. Women can take advantage of this. Men can also take a joint loan with the women of their family. Generally, husband and wife are co-borrowers on such loans. But mother-son or father-daughter can also take loan together. Due to this, the responsibility of repaying the loan is also divided and the interest is also reduced.

Minimize the loan amount

The smaller the home loan amount, the more useful its interest rate can be. For example, a private bank charges the lowest rate for loans up to Rs 30 lakh, a slightly higher rate for loans between Rs 30 to 75 lakh and the highest rate for loans above Rs 75 lakh. Buying a home becomes easier with the availability of a higher loan. But in this case, keep in mind that if the loan is large, then the interest also has to be paid more. If you are refinancing, you can get a better interest rate on a smaller loan.