One of the most important considerations when selecting a lender for housing loan is the interest rate. Lenders in India offer housing loans at different interest rates. Moreover, the interest rate between two borrowers from the same lender often varies too. In this post, we’ll have a look at five effective tips which can help you reduce your Housing Loan Interest Rate.
While there are a number of factors that should be taken into consideration when selecting a lender for a housing loan, the interest rate charged by the lender is one of the most important. Lenders in India offer housing loans at different interest rates and often the interest paid by two different borrowers from the same lender is different as well.
You can negotiate the interest rate on your housing loan to get the best deal and save a significant amount of money. How? We have listed five handy tips which you can use to reduce the interest rate on your housing loan.
- Contact multiple lenders
Rather than selecting the first lender that you come across, it is better to get in touch with multiple lenders before finalizing a lender. As mentioned above, lenders in India offer housing loans at different rates. No lender wants to lose good borrowers.
So, if a lender is offering you a housing loan at a particular interest rate, visit the next lender and tell them about the deal offered by the other lender. There is a possibility that this lender might offer a better deal than the other lender. Remember that a housing loan is a long-term commitment and even the smallest difference in the interest rate can help you save a lot of money. This is one of the simplest ways to reduce the Housing Loan Interest Rate.
- Use your credit score to negotiate
Lenders now lay a major emphasis on the credit score of the borrowers. If your credit score is below 700, you might find it difficult to get a good deal on housing loan. To get the best deal, your credit score should be 750 or more.
If you have an excellent credit score, you can use the same to negotiate the interest rate further. Higher credit score means that you are a reliable borrower and would repay the loan on time. As you carry a minimum risk for the lender, they can reduce the interest rate.
- Time your discussions with the lender
People working in the loan department also have monthly and quarterly targets and around 8 out of 10 times they fail to meet the targets. Use this to your advantage and visit the lender around the end of the month.
- Apply along with other borrowers
If there is a new project under construction at a place where you are planning on buying a house, find others as well who seem interested in the same project. Apply for a housing loan along with other buyers and the lender will surely offer a great deal to you and others.
- If you did negotiate well, make sure that you get the same in writing
Last but not the least, if you were able to negotiate well with the lender, make sure that you get the same in writing from the lender. Sales representatives often inflate the future benefits even when they are not allowed to do so when they are required to reach their target.
Avoid getting misled by such promises and benefits and get everything in a documented form properly.
Use these tips when applying for a housing loan and you might be able to get a deal that can help you save a lot of money.