The tenor for home loans normally ranges from 15 to 20 years. In other words, if you decide to avail yourself of a home loan, you will need to pay home loan EMIs for at least a period of 15 to 20 years until of course you plan to and can afford to foreclose your home loan before the agreed due date. Thus, this long tenor and commitment makes it extremely important that the loan borrower ensures they are availing themselves of an affordable home loan. Affordable home loans are simply those loans that loan borrowers can pay comfortably without feeling burdened at any point.
One of the things that ensures the affordability of a home loan is the home loan interest rates that one gets. The home loan interest rate that home loan borrowers are offered has a direct impact on home loan EMIs as well as the total cost of borrowing money. Therefore, securing a low home loan interest rate is crucial to making a home loan an affordable home loan.
Let us now discuss some simple tips that will help you secure a low home loan interest rate or avail yourself of an affordable home loan.
Simple Tips and Tricks That Will Help You Secure an Affordable Home Loan
1. A High Credit Score Always Helps: An individual’s credit rating also has a direct impact on the home loan interest rates they get. Individuals who have credit scores in the range of 750 to 900 are people who rarely default on loan repayment. Such individuals pose minimum risk to the lenders and therefore, lenders sanction loans to such individuals on the best possible loan terms and conditions, including a low home loan interest rate.
2. Opt for a Low LTV Ratio Loan: The LTV ratio refers to the ratio of the loan amount to the actual fair market value of the property that secures it. In the case of low LTV ratio loans, the loan amount is low when compared to the property that secures the loan. Thus, the risk for the lenders is minimal. Consequently, for low LTV ratio loans, lenders are quite willing to negotiate on the loan terms and conditions, including assigning the lowest home loan interest rates to borrowers.
3. Make Sure to Have a Stable Job and Income: Home loans are secured in nature. They are secured by the property bought with loan money. Even though these loans are backed by collateral, lenders still want to minimize risk by lending money only to those individuals who they think can pay loan EMIs on time. Therefore, having a stable source of income is important. If you lack in terms of having a stable source of income, include income from all the different income sources in your loan application to enhance your chances of loan approval.
4. Always Use a Home Loan Calculator: A home loan calculator tool is an online tool that home loan applicants can use to calculate the EMIs they will need to pay to comfortably repay the money they have in their mind over the loan tenor that they want to go with. The home loan calculator is an important tool that helps with repayment planning. It helps borrowers decide the affordability of a home loan and whether or not they will be able to pay the EMIs of the loan value and loan tenor they have in mind.
Individuals planning to avail themselves of a home loan must always use the home loan calculator to make sure they are taking on the burden of loan EMIs that they will be able to comfortably repay.
Conclusion
If you want to avail yourself of affordable housing, other than the things mentioned above, one of the simple things you could do to enhance your chances of loan approval and availing of the loan on the most beneficial loan terms and conditions is to make sure you are taking your time to find the right lender for you and negotiating with the tops lenders you have in mind for the best loan terms and conditions, including a low home loan interest rate.
Further, you can even consider availing yourself of a home loan when lenders come up with seasonal offers to entice new customers. Lastly, applying for a home loan amount that matches your eligibility and loan repayment capacity will also work in your favour and help you secure a low rate of interest and other beneficial loan terms and conditions.
