Home loans are rising, with interest rates at their all-time low. Home loan applications have become a lot simpler over time; however, choosing the right lender has become a dilemma. While the borrowers may be aware of the application process, eligibility, and documentation requirements, they fail to realise that with little awareness, they can get the loan at more affordable rates than they currently opt for. Therefore, here are a few tips to get the lowest home loan interest rate in 2022.
Best Tips to Get the Lowest Home Loan Interest Rate in 2022
Following are the best tips for the lowest home loan interest rate:
- Do Thorough Research: Follow this mantra before applying for a home loan with any financial institution! There are various aspects concerning the loans that should be considered. Before applying for the loan, compare the processing fees, interest rates, prepayment charges, other costs, terms and conditions, eligibility criteria, etc. This will help you make an informed decision and apply to the best financial institution that suits your purpose.
- Healthy CIBIL Score: CIBIL score is the parameter through which the financial institutions assess the creditworthiness of the borrowers. It is the credit performance of the borrowers presented in 3 digits between 300-900. A healthy CIBIL score depicts the sound repayment capabilities of the borrowers. Therefore, always strive to maintain a healthy CIBIL score.
Follow the below tips to keep a good CIBIL score:
- Repay your EMIs on time.
- Pay your credit card bills in full and before the due date.
- Do not max out your credit cards.
- Don’t make multiple hard inquiries for loans.
- Maintain a good mix of secured and unsecured loans.
- Proper Documentation: Each financial institution requires documents for sanctioning loans. However, primary documents are similar in most cases. If you furnish appropriate documents as required by the lender, it facilitates the lender’s adequate assessment of your profile, thus increasing their confidence. This can help you get loans at an affordable interest rate.
The essential documentation that is similar across all the lenders include:
- Identity Proof: Aadhaar Card, Pan Card, Passport, Voter ID Card, Driving License
- Address Proof: Bant Statements, Utility Bills, Property Tax Receipt, Property Registration Documents, Voter ID Card
- Age Proof: Valid Passport, Life Insurance Policy, Driving License, PAN Card, Birth Certificate, School Leaving Certificate
- Income Proof: Last six months’ current account statement, last six months Bank Statements for CC/OD facilities (if taken), copy of the P/L Projection Statement for the previous 3 years
- Business Proof: Registration Certificate for Commencement of Business, copy of the Income Tax Returns for the last two years, Business Profile on letterhead
- Details of existing loans, if any
- A cheque for processing fees
- Introduce a Co-applicant: In case you fail to meet the eligibility criteria, no worries! You can still avail of the loan. If you can bring a co-applicant and, in some cases, guarantors, then financial institutions agree to provide the financing. A co-applicant increases the net income available for repayment of the loan and reduces the bank’s risk as the banks can proceed against the co-applicant as well in case instances of non-repayment occur. A good CIBIL of the co-applicant also assures the financial institutions of the repayment, as it depicts a better repayment capability.
Avoid paying hefty interest on your home loan with the above tips. You can use a home loan EMI calculator if you want to calculate EMI. By just entering the loan amount, tenure, and home loan interest rate. Compare different rates, find the best one, and apply!