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How To Get Lowest Interest Rate On Home Loan?

IndianMoney.com Research Team | Posted On Wednesday, August 08,2018, 06:40 PM

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How To Get Lowest Interest Rate On Home Loan?

 

 

 

Found the dream home you badly want? Great, Now it’s time to avail a home loan and buy it. But, there’s a problem. RBI has just hiked the repo rates in the last two bi-monthly policy reviews, to keep inflation in check. The repo rate has been hiked from 6% to 6.5%. Repo rate is the rate at which RBI lends to banks.

When RBI hikes the repo rate, banks increase home loan rates. Banks have increased the MCLR (Marginal Cost of Funds based Lending Rate). This is the minimum interest rate below which the bank will not lend. HDFC Bank, Bank of India, ICICI Bank, PNB, Kotak Mahindra Bank and SBI have all hiked MCLR in recent times.

This hike in MCLR translates to a higher interest on home loans. New and existing borrowers are feeling the pinch of an increase in home loan interest rates.  Is there a way you can get lowest interest rates on home loans? Check home loan EMIs with home loan EMI calculator.

Want to know more on Home Loans? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

 

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How To Get Lowest Interest Rate On Home Loan?

 

Make Your Wife The Co-applicant Of The Home Loan

You can avail a home loan along with spouse called joint home loan. If you avail a joint home loan, the bank combines your income with spouse’s income to calculate eligibility. You are eligible for a higher loan amount if you avail a joint home loan.

If you avail a joint home loan with spouse, and the property is owned by her or she is a co-owner (you and spouse are joint-owners of the property), some States in India offer a lower registration fee. UP, Delhi, Punjab and Harayana give an exemption on taxes paid to the State, if a property is registered in a women’s name. Some States charge a lower stamp duty, if the property is registered in a women’s name.

Then there are tax benefits if your wife is the co-owner of the house and co-applicant of the home loan. The Home Loan EMIs are divided into 2 components. Home Loan Principal EMIs and Home Loan Interest EMIs.

See Also: Important Facts On Home Loans

 

Home Loan EMIs = Home Loan Principal EMIs + Home Loan Interest EMIs.

 

You are eligible for tax benefits on home loan EMI Principal Repayments up to Rs 1.5 Lakhs a year under Section 80C. You also get tax benefits on home loan EMI Interest repayments up to Rs 2 Lakhs a year, under Section 24(b). There is also an additional deduction up to Rs 50,000 a year on interest repayments under Section 80EE for first-time home buyers.

If you and working spouse avail a joint home loan, you get these tax benefits on the home loan repayments. Your spouse also gets to avail the tax benefits separately on the same home loan.

You and spouse get a combined deduction of Rs 3 Lakhs a year on Principal repayments on home loan and Rs 4 Lakhs a year (which can go up to 5 Lakhs for first-time home buyers), on Interest repayments on the home loan.

SEE ALSO: How Insurance Riders Are Your Real Friends?

 

Maintain A Good Credit Score

A high credit score assures the bank that you can repay the home loan with ease. Credit bureaus like Credit Information Bureau (India) limited popularly called CIBIL, assign a score in the range of 300-900.

If you have availed loans from banks in the past, your repayment data is sent by banks each month to credit bureaus who prepare credit information report (CIR), which is basically a track record/history of repayments. Based on CIR, CIBIL assigns you a CIBIL score. A CIBIL score of 750 and above is considered to be good.

Make sure you have a good credit score before applying for a home loan. If you apply for a home loan with a low credit score, the home loan will not be sanctioned. You can negotiate with the bank for lower interest rates on home loans, if you have a good CIBIL score.

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