Winning Bizness Desk
Mumbai. The Reserve Bank has increased the repo rate by 0.90% in the last two months, prompting loan rates to go up. Home loans, which were available at 6.40-6.80% till two months ago, have now reached 7.30-7.70%. In such a situation, whether the loan is already running or you are about to take a new loan, in both the cases the interest will increase. So what can be done for lower rates?
Enquire With Your Bank
If your loan is in progress, check with your bank or lending institution to know how to check rising rates. Many non-banking institutions reduce your rate by charging a small processing fee, which reduces your interest. If you have a loan from a bank and are on the MCLR or Base Rate benchmark, know that the lowest rates are still available on repo loans.
2. Check offers available
In the case of refinancing, many banks may offer loans at a rate even lower than their lowest advertised rate. You have to be eligible to get the discount. Often in cases of refinance or balance transfer, banks offer discounts on rates to attract new customers. If you are paying a very high rate on your loan, you can reduce it through refinancing. For example a private bank is giving its lowest rate of 7.60% but in refinance case they are giving loan at 7.45% also. This happens in many banks. Talk to banks near you to find out what discounts you can get.
3. Check and improve Credit Score
A good credit score is essential to get an affordable loan. Credit history is essential for credit score. If there is no history then your score will not be there and if you are taking loan for the first time then you will have to pay a little more interest. To avoid this, one can develop a credit score by taking a credit card, personal loan or BNPL before taking a home loan. Take the score above 750. Raise your score if your loan is in progress.
4. Link Women to Loans
A Many lenders offer their lowest rates to women. Women can take advantage of this. Men can also take a joint loan with the women of their family. Generally, the husband and wife are the co-borrowers on this type of loan. But mother-son or father-daughter can also take loan together. This also splits the responsibility of repayment of the loan and also reduces the interest.
5. Minimize Loan Amount
The smaller the home loan amount, the lower the interest rate can be. For example, a private bank charges the lowest rate on loans up to Rs 30 lakh, a slightly higher rate on loans up to Rs 30 to 75 lakh and the highest rate on loans above Rs 75 lakh. Buying a home becomes easier by getting more loans. But in this case keep in mind that if the loan is bigger, then the interest has to be paid more. If you are refinancing, you can get better interest rates on small loans.