Lowering Home Loan Interest Rates Increase Loan Eligibility
Home loan interest rates are the percentage of amount you pay on the loan amount, to the financer per annum. Earlier these rates were quite higher, making it impossible for a common man to buy a home with a home loan. So they used to wait for years to get the matured policy amount or encash other investment for buying a place of their own.
Owing to higher rates, most of people failed to pass the eligibility criteria to get a loan earlier. But now the lowering rates have changed the scenario totally, people can now comfortably join the home loan bandwagon and can create their own space.
Home loan interest rates are the first thing we have our eyes on to choose the property & the lender. The interest rate decides the interest cost, which we have to pay extra on the home loan. It is fixed depending on various factors, some of them are:
- The location of the property, on which the lender is investing money through you.
- Depending on the loan slab the interest rate is determined.
- The job profile & the income of the borrower determine the rate of interest. For example, if you have sufficient income to accommodate the loan EMI, chances are there that you may get lesser interest rates.
- The credit score also determines the home loan interest rates of which the borrower is eligible for.
- Existing loans, bank statements supporting the borrower’s expense habit and debt repayment practice, determines the interest rate.
- Type of interest the borrower chooses to repay the loan amount also fixes the rate of interest he would get. Floating home loan interest rates are lower compared to the fixed rate of interest.
The above mentioned features play a vital role in determining the interest rate the borrower would get. Other than these, the lender’s policies & profit margin also plays an important role.
After going through, you must be wondering how lowering rates would increase your loan eligibility, right. We would try to give you the answer; earlier higher rates resulted into higher EMIs, which called for higher incomes to absorb the monthly EMIs. But when the rate of interest came down, the monthly EMIs were automatically affected. The lower rates when combined with the longer tenure, it resulted into affordable EMIs, which is easily accommodated in your monthly expenses.
Lower EMIs mean, borrowers with moderate income can also afford to pay off the debt comfortably. Hence proved, lowering interest rates can increase the loan eligibility.
Now all you need to put your financial profile in order, with a disciplined expenditure habit. Then choose RBI authorized financer with existing goodwill, after comparing & visiting at least three to four lenders. Once you fix your lender, choose the type of interest rate from the available home loan interest rates according to your job profile & financial affordability.
Design your tenure in such a way that, you pay off your debt soon, without increasing the interest cost unnecessarily.