Home loan is easy to avail and because of this facility people can easily accomplish their dream of buying a home of their own. While applying for home loan finance people generally look for the attractive and lower interest rates.
Many lenders offer attractive interest rates along with home loans but there are other factors too that should be considered while applying for a home loan.
- Loan Duration
The duration of the loan affects the interest rate that is inversely proportional to the interest rate. Longer loan duration leads to higher interest rate and overall cost too. Shorter loan duration leads to lower rate of interest for the individual. You can easily find suitable tenure for your loan by using EMI calculator available online.
- Credit Score
Credit score helps in determining the creditworthiness of the loan applicants. A good credit score helps in passing your loan easily and gives attractive offers on home loan finance by the bank. A poor score will give a negative effect and it will raise many problems in the sanction of the loan by the bank.
- Type Of Interest Rate
There are 3 types of home loan: floating, fixed and mixed interest rate loans. Floating rate and fixed rate loans are most popular among those who take loans. Mixed interest loans are those where interest rate is fixed up for a limited period and after that duration floating loan rates becomes applicable. A fixed rate and mixed rate loan comes up with higher risk factors.
- Property Location
Location of your home also decides the interest rate charged by the bank as it will have high resale value and all basic amenities as well. Homes that are in commercial locality or with less amenities or with less neighborhood are likely to be cheaper. They also have low resale value so you might get loan with high interest rates for them.
- Job Profile
Whether you are salaried or self-employed, this also decides your chances of getting home loan easily. If you have a stable income slab then yu are considered fit for home loan. If your income is unstable or there are many ups and downs in your business then you might have to face problem in getting the loan. Lower interest rates goes to those who have stable income and are working in leading private sector.
- Loan To Value Ratio
If you go in for a higher down payment while buying your home and along with it you take home loan too, in that case, you need to pay less quantum of loan that will also help in reducing interest rate as well. Loan to Value Ratio refers to the percentage of the property value that you can get financed through home loan by the bank.
- Existing Debts
If your debt list is pending or you have unpaid dues then this will definitely put a bad impact on your credit score. This will further lessen down your chances of getting a loan. Missing EMIs, making payments after due date and pending credit card bills are a major factor for spoiling your credit score. If you want attractive interest rates and home loans easily then you need to pay your dues and bills on time.
Your age matters when you apply for the loan as the lender is concerned about your years left as a salaried or self-employed person. If you apply for loan at a younger age then you will get loan easily as you are still into the job and you can pay loan EMIs easily too. If you take loan around your retirement age then there might be a possibility of getting lower interest rate because you have already a stable bank balance where you can pay loan easily at a later stage too.
- Credit Limit
If you take loans frequently and use up your credit limit on a faster basis then there are chances that bank might not be interested in giving you loan easily. Over utilization or higher utilization of credit limit also brings down credit score. Never exceed 40% of your credit limit in any given situation.
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