The days of low-interest housing loans are not numbered if you are able to meet the eligibility criteria imposed by the loan provider. You can always get the best home loan interest rate offered by banks and non-banking financial companies. It is important to maintain the eligibility criteria before you finally apply for house loans in order to avail the low rate of interest.
Here are some of the best ways in which you can get the lowest home loan interest rate:
- A credit score is the first factor that will be determined by every home loan provider, be it a bank or a non-banking financial institution. The three-digit credit score is a financial representation that determines the eligibility and creditworthiness of the borrower. This score plays a vital role in the low rate of interest on housing loan applications because it takes into consideration all the past financial activities of an individual.
- Documentation is the second parameter that you need to meet if you want a low rate of interest on your housing loan application. When you apply for a housing loan, the loan provider will surely match and validate all the information that you have written down on the application form. A list of documents will be required by the borrower to produce so that the loan provider is able to run a background check based on personal, legal, property, and financial aspects. To successfully complete your application and get a low rate of interest, make sure you complete your documentation process.
- The credit utilisation ratio is the third most important parameter that the loan provider will check at the time of screening your loan application. The credit utilisation ratio is an important criterion that determines the financial stability of an individual. It is the ratio between the total credit limit offered to an individual and the total credit limit that has been exhausted by the individual. When an individual exhausts the available credit limit completely, it means that their financial condition is not stable enough to handle another loan. Therefore, if you are preparing for a low rate of interest on a housing application, make sure you have a balanced or low credit utilisation ratio.
- Income is the fourth parameter that will play a crucial role in determining whether your loan will be affordable or expensive. If an individual does not have a good income, it will be difficult for him to manage fixed obligations, monthly expenses, and loan installments. Therefore, in order to avoid risk, loan providers will offer a high rate of interest to individuals with low income in order to avoid risk and recover the maximum amount within a short span of time.
- The debt-to-income ratio is the fifth most important parameter that will be checked by the loan provider at the time of screening your loan application. If you have multiple loans, you will not be eligible for a new loan because your debt to income ratio will be high. An individual with a high debt-to-income ratio means he or she has multiple instalments to pay, which makes it a burden to add on a new loan. Therefore, the rate of interest will be high for maximum recovery.
Wrapping up
When you take a home loan, you should focus on getting the lowest home loan interest rate. The best home loan interest rate makes your EMI affordable for you to pay every month.
