Home Loan: 7 smart ways to get a cheap home loan, you will save lakhs of rupees in interest...
Buying your own house is the biggest dream of life, and a home loan is the ladder to fulfill this dream. But the interest rate of the loan can be heavy on your pocket. Usually, many factors like your income, loan amount, and credit score determine the interest rate. But there are some smart ways by adopting which you can improve your eligibility and get a loan from the bank at the cheapest interest rate. Let's know the 7 tips that Punjab National Bank (PNB) itself has provided.
Tip 1: Higher down payment and longer tenure
Usually, banks offer lower interest rates on home loans up to Rs 35 lakh. Therefore, try to give as much down payment as possible from your side so that your loan amount can be reduced. Apart from this, choose a longer tenure (more than 15-20 years) to reduce the burden of your EMI. This also gives the bank confidence that you will be able to repay the loan easily.
Tip 2: Choose the right interest rate (Fixed Vs Floating)
In a fixed rate, your EMI remains the same for a few years, whereas in a floating rate, your EMI or loan period keeps increasing and decreasing according to the market. Nowadays, most banks give loans at a floating rate, which is slightly cheaper than fixed. Before taking a loan, understand both types of interest rates from your bank.
Tip 3: Stable income and a good job
The bank always wants to ensure that you are able to repay the loan. If the person applying for the loan has a stable and good income, and he works in a government job (PSU) or a reputed private company, then the bank considers him a reliable customer and offers attractive interest rates.
Tip 4: Make your credit score a 'superstar'
Needless to say, if your credit score is more than 750, then the bank readily accepts your loan application. A good credit score shows your financial credibility. So, before applying for a cheap home loan, try your best to improve your credit score by paying all your old bills and EMIs on time.
Tip 5: Make female applicants a 'trump card'
Did you know that most banks and NBFCs offer a certain discount (usually 0.05%) in interest rates to female home loan applicants? The next time you apply for a loan, check with your bank if you can get any interest rate benefit by making a female member of the family (like your wife or mother) the primary applicant.
Tip 6: Keep the option of 'balance transfer' open
Home loan balance transfer is a facility that allows you to transfer the remaining amount of your existing home loan to another bank that is offering you better terms and lower interest rates. If you get a cheaper offer in the middle of the loan tenure, it is a great way to save interest.
Tip 7: Keep an eye on offers
While planning to take a home loan, always keep an eye on festive season offers, tie-ups of the bank with a builder, or any special promo. Often on occasions like Diwali, New Year, or Akshaya Tritiya, banks offer great offers like a processing fee waiver or a little extra discount in the interest rate, which can save you thousands of rupees.
What should be the minimum credit score for a home loan?
Although banks give loans on a score above 700, to get the best and cheapest interest rate, it is considered ideal to have a credit score of 750 or more.
Is it always beneficial to pay a higher down payment?
Yes, paying a higher down payment reduces your loan amount, which reduces your EMI and also increases the bank's trust in you. This increases your chances of getting a lower interest rate.
Is there any charge for a home loan balance transfer?
Yes, you may have to pay processing fees and some other charges to the new bank. Therefore, before making the transfer, calculate how much interest you are saving even after paying the fees.
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
