2 Important Points to Remember Before Finalizing Your Home Loan Interest Rate

Before the bank sanctions your loan, you are provided with a home loan agreement. As a borrower it is of utmost importance that you read all the clauses included in the agreement. This helps avoid facing any major problems during the tenure of your home loan. Here are two important points that an applicant needs to keep in mind before they finalize their home loan rate:

1. You can negotiate the interest rate

When it comes to home loan interest rates, applicants no longer have to adhere to the rates banks offer. With the increase in the level of competition, most banks are willing to reduce the home loan rates for new customers. Also, the RBI’s latest policy has provided applicants with more power to negotiate home loan rates with the bank. Having a strong credit score is another way one can pressurize a bank to reduce their interest rates charged.Another way you can attempt to reduce the interest rates charged is by applying for a home loan with the help of a broker. Banks are more willing to decrease the interest charged just to attract new customers. You can use any of these methods to help reduce your interest which helps reduce the financial strain that comes with a home loan.

2. Special clauses

Before you sign the home loan agreement it is extremely important for the borrower to thoroughly read the agreement. Sometimes banks add special clauses which allow them to change home loan interest rates when the market’s interest rate increases. If you have agreed on a fixed rate of home loan interest you must ensure that no such clause is added which provides the bank power to change the rate when favourable. There are also certain clauses which allow the bank to demand for additional security when the property rates fall. In the case that the borrower is not able to provide the additional security, they will be marked as a defaulter in the eyes of the bank. Hence it is crucial for a borrower to know exactly what clauses and conditions he is agreeing to before he signs the agreement. If required, one can also hire an attorney to ensure that the agreement cannot harm the borrower.

As a borrower it is vital that one knows every single detail regarding their home loan agreement. Hence it is advised that a home loan applicant familiarize themselves not only with the home loan interest rates offered but every other aspect of the home loan process and the terms and conditions set forth by the bank itself.