Have you just started working and already dreamed of buying your own house? Don’t worry, you are closer to your dream than you can imagine. Many financial institutions are eager to provide you with housing loans, just a click away. Whether you are a salaried employee or self-employed, you are entitled to housing loans.
Before applying for a housing loan, it is very important to know about your eligibility. To get a clear understanding, check out the home loan eligibility calculator. The applicant’s age, occupation, CIBIL score, and earnings are important factors to be considered. Applying for a housing loan with your working spouse as a co-applicant enables you to apply for a higher amount.
If you have a housing loan to your name, you will be entitled to income tax savings. You can deduct Rs 1.5 lakhs on the principal, registration, and stamp duty. In the case of a co-applicant loan, your spouse will also get the same tax benefit under Section 80C.
Next comes the important step of knowing your EMI, or Equated Monthly Instalment. In the home loan EMI calculator, enter your desired loan amount, the tenure of the loan in years, and the rate of interest (calculated per annum).
In August 2022, the Reserve Bank of India (RBI) hiked the repo rate by 5.40%. It has caused the banks to increase their rate of interest on the loans. You can still save your hard-earned money by reducing the interest amount. Read on to learn more.
Methods for Lowering Home Loan Interest Rates
There are numerous ways to help you save money if you plan from the beginning. You have to act smartly and on time. Let’s see some of them,
- Maintaining a good credit score
Even before you attempt to buy a house, it is advisable to give yourself some time to improve your credit score. Having a high credit score makes you eligible for better housing loans. Seeing that you have a CIBIL of 750, even the lenders will be eager to offer you better deals. You will be able to negotiate your desired interest rate as the lender will see you as a reliable borrower.
You just have to ensure that you have not been late or missed any payments. Enable the autopay credit card option whenever applicable. A little responsibility on your part will go a long way.
- Make a larger down payment
Agreeably, no one can buy a house without taking a loan. However, you should have a certain amount of money set aside, that you can use as a down payment. In any case, financial institutions allow only 75% to 90% of the loan amount.
It is commendable that you deferred the plan of buying your house until you had a sufficient bank balance. Borrowing a lesser amount will lead you to acquire a lesser interest rate.
- Curtail your tenure
The primary factor influencing your interest amount is your loan tenure. To shorten the tenure, you have to pay more EMI.
Even if more monthly payments seems difficult, consider the interest amount you will be saving. If you can close the loan before you save up on the overall interest payable.
- Revising EMI
Your EMI, or equated monthly instalment, can be revised annually. If you get a salary hike, you should start paying more EMI.
As discussed earlier, the loan tenure will reduce as well as the interest. You will be the true owner of your dream house sooner than you started.
- Opting for prepayments
The EMI that you pay is a combination of two amounts. One is the principal, and the other is the interest on the outstanding loan amount. In the initial stage of the loan, you are paying more for the interest and less for the principal.
Suppose you get a salary hike or a bonus and deposit the amount as a prepayment. The principal amount will be reduced along with interest.
- Woman benefits
Many financial institutions give extra benefits to working female applicants. Women may be the sole owner or co-borrower. They are entitled to lower interest rates on loans.
Furthermore, stamp duty charges are lowered if the woman is the primary owner.
- Market survey
Before committing to a particular lender, always compare the interest rates online. If it suits you, go ahead with the loan.
- Refinance your loan
Suppose you feel you are paying more interest on your loan than another bank. You can either negotiate a lower interest rate or shift your loan to another lender. However, doing so is not advisable.
There are also many different ways to lower your expenses on the interest, like starting a SIP, paying a mortgage point, or choosing a floating rate of interest instead of a fixed rate. However, keep in mind that different banks offer different services. With so much information available online, spend some time understanding your requirements. Ask the financial advisors about your doubts and learn about the schemes they offer.
I hope you have found the information useful. Please feel free to check out Piramal Finance for a housing loan. The company has a registration certificate from the National Housing Bank (NHB). They not only provide finance for housing but also engage in various other financial services and businesses.
At Piramal Finances, once you apply for a housing loan, the relationship manager will contact you. You have to submit the minimal number of required documents. Flexibility is allowed on the loan tenure, prepayment, and foreclosure, according to your desire. You can choose between a floating interest rate and a fixed rate to avoid putting additional strain on your budget. The best news, Piramal Finance is ready to finance 90% of the purchase price. Turn your dream into reality.