One of the major long term monetary commitments is taking a home loan. In most cases, home loans involve huge amounts. The interest payable on these loans are quite high as well. However, there are some ways in which one can avail of home loans with comparatively lowest home loan interest rate. In a general case, home loans are not reduced by the banks. However, if one switches the balance loan to another vendor, there is a chance of lowering the interest rate. In order to avail of the changing vendor option, one has to pay a small amount of nominal fee to the existing vendor.
Switching The Home Loan To MCLR
The full form of MCLR is the Marginal cost of funds based lending rate. It is one of the most important factors for determining the home loan rate. There are four major components that calculate the MCLR. They are the tenor premium, marginal cost of funds, operating cost and the negative carry on account for cash reserve ratio. By availing these services, the banks monitor the MCLR on a regular basis. They also review the lending rates. In this way, there is a high chance of getting the home loan interest rates reduced. A lot of banks have applied this procedure and over the years, there has been a lot of success stories to tell.
Credit Score
A credit score is a three-digit number that is used for evaluating how well the customers have behaved in the past while availing a loan. If an applicant has a low credit score then they are considered to pay higher interest rates. There are a lot of vendors who have used the credit score to lower the interest rates. The home loaners must see to it that most lenders consider credit scores of various co-owners equally and not just the applicant of the home loan. Thus, if the applicant has a spouse, then he or he has to make sure that their credit score is well above the average rate.
Types Of Interest Rates
There are mainly three types of home loans that banks provide. They are floating rates, fixed and mixed rates. The floating and the rate that is mixed is self-explanatory, the rate of interest for the fixed rates stays firm, constant and is also pre-determined. The banks in these regards are going to charge less from their customers only when they are sure that the purchasing power parity of the applicant is less. The home loan EMI calculator can be used to have an idea of the amount that has to be paid as EMI.
Most banks provide some amount of concessions to women taking up a home loan. This concession is available in almost all kinds of home loan categories. Therefore, before availing a home loan, one needs to check that if they are provided the loan with proper interest rates. In case they are not, there are various ways in which the interest rates can be reduced.
