Updated January 17, 2021 | 07:00 IST
These home loan tips will not only help you get the best interest rate, but also keep the overall cost of interest low until the end of the mortgage term.
Thinking of buying the house of your dreams? 7 home loan tips for first-time borrowers
New Delhi: For first-time buyers, the real estate scenario seems favorable enough to take advantage of the offers and offers available. If you’ve already identified your home and are looking for a home loan, here are some tips that you may find helpful. These home loan tips will not only help you get the best interest rate, but also keep your overall interest cost low until the end of the mortgage term.
- Strengthen the CIBIL score
To boost your eligibility for mortgage loans, boost your CIBIL score. It shows how good you are at paying installments, your past contributions, your investments, and how much you can easily repay. To maintain a good CIBIL score, a person must have a clear financial record. Your credit card payment must not go unpaid.
- Negotiate the interest rate
Lenders mainly set the interest rate within a minimum and maximum range, the actual rate charged depends on your eligibility criteria. As a borrower, you have the ability to negotiate a better interest rate. Financial advisers say you can do this not only by comparing your loan options, but also improving your eligibility by adding a co-borrower and combining the co-borrower’s income with your own.
- Opt for a mortgage only after comparing
Before you focus on a loan, compare the different loan products available in the market. Look at the Equivalent Monthly Payments (EMIs), interest rates, processing fees, and other related fees to choose the perfect loan. Nowadays, home loans offered online, you can always explore with just a few clicks. Look at the base rate, the margin offered, what is the maximum term offered, and how the eligibility is calculated and especially if a property similar to yours was financed by this lender earlier.
- Understand your borrowing capacity
People often decide to pay high EMIs believing that the loan burden would decrease over time due to the annual increases in their income. However, their income may or may not increase over time. Therefore, they should borrow up to the limit where paying IMEs would not strain their finances.
- Co-borrow with a spouse
The lowest interest rates are often reserved for female borrowers. It is very common for homebuyers to co-borrow with their wives for the lowest rate.
- Consider a long term loan
Since home loans are large investments and the nature of loans is long term, new home loan borrowers should plan their home purchases by understanding their current and future commitments while planning their IMEs. As your income grows, consider prepaying or increasing your IMEs to close your loan sooner.
- Negotiating interest rates
Mortgage rates are at historic lows, and the market is full of attractive offers. You should compare your choices before taking out a loan. Even after taking out the loan, you need to keep an eye on the interest rates to make sure you get a good deal from your lender. If not, consider talking to your lender or even switching to another lender with a better deal.