Factors to keep in mind when selecting an interest rate for Home Loans

Home loan rates are influenced by several factors. These include the principal amount, repayment tenure and interest rate amongst many other important factors. While one can easily chose the other factors based on one’s preference, certain features must be taken into consideration when choosing the housing loan interest rates.

Credit score

Before one opts for the housing loan interest rates, one must first check one’s credit score. The credit score is an indicator of the applicant’s financial capability. A high score indicates that the applicant has a good financial stability. A low score would indicate recalcitrance. If a financial institute deems the applicant’s credit score as low, the applicant may not be able to get the home loan rates as desired. However, if the applicant has a low score, certain measures can be taken to ensure that this score increases well before the loan application process begins. Once the steps are taken and the score is raised to an acceptable rate, the applicant can proceed with the loan processing.

Loan amount

As per any other loan application process, the loan amount influences the interest rate. Through this process, the value of the amount influences the percentage of the interest rate. Therefore, if the applicant applies for a large principal amount, there is a high likelihood that the interest rate will also be high. However, this also depends on the repayment tenure. When opting for an interest rate in this process, the applicant must ensure that the interest rates is flexible enough to be easily repaid, without adding any financial pressure on the EMI’s.

Fixed or floating rate

As per the features of the home loan interest rates in India, an applicant can opt for a fixed home loan rate or a floating home loan rate. Each of these options offer different benefits. However, these rates also depend on the financial profile of the applicant. For those with a steady income, a fixed interest rate offers a lot of benefits, especially for a home loan with a long repayment tenure. The risks involved in this form of interest rate is low. Alternatively, floating interest rate is the best choice for those who will have an increase of income in the near future. Although the risks are high for this interest rate option, it offers a shorter repayment tenure for those who opt for this rate.

EMI’s

An applicant would need to repay the borrowed funds of the home loan through EMI’s. However, the value of the EMI’s depend on the interest rates. Most of the home loan interest rates in India offer flexible rates thus ensuring you have sufficient funds to repay the borrowed amount within the given tenure, without causing any additional financial strain.