Business Desk, ETV Bharat: If you are one of those who are planning to buy a home/property anytime soon, the good news is it is probably the best time to avail a home loan as banks have reduced their lending rates to multi-year lows.
Home loan rates at many public and private sector banks, along with housing finance companies (HFCs), have now come down to below 7% after the Reserve Bank of India (RBI) reduced repo rate to just 4%.
However, it is important to note that home loan rates still vary from customer to customer depending on factors like an individual’s risk profile, credit history etc.
So, if you want to get the best home loan deal, here are some of the key pointers you should keep in mind to reduce the cost of your loan as much as you can:
1) Credit score
Banks/HFCs always consider the applicant’s credit score before evaluating the application for a home loan and offering the final lending rate. Those with higher credit score (750 and above) have higher chances of loan approval as they are considered more creditworthy. But even if your credit score is lower, your loan may be approved, though at a much higher rate.
So, in order to get lowest rate, keep a tab on your credit score and try and ensure it stays above 900. Also, try and apply for a joint home loan as you might be eligible for a lower home loan interest rate if your co-applicant has a better credit score than you.
2) Gender
Many banks in the country offer women applicants a better home loan rate in order to promote home ownership among females. So, if possible, apply for home loans with the woman of the house as main applicant to get concessional interest rate. For instance, many commercial banks offer a 0.5% concessional interest rate on their home loan for women.
3) Employment/occupation
Your occupation may also play a role in the home loan rate you are offered. Salaried employees usually get a lower home loan interest rate than self-employed/business owners as the former category has a fixed source of income and is considered less risky when it comes to loan repayment.
So, in case of two applicants (like a husband and wife), please check whose occupation would be considered less risky and would be offered lower interest rates. For instance, even among salaried, government employees might be favoured over private sector employees. Similarly, among the self-employed, doctors and chartered accountants (CAs) are considered least risky professions, so they may be offered better rates.
