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According to a report, the current home loan interest rates are the lowest in four decades and are expected to remain the same for another six to twelve months.

This is the impact of RBI’s decision to keep the repo rate unchanged at 4%. These changes have also ushered in the ideal time for potential property owners to avail of home loans.

Currently, many lending institutions are extending housing credit at an interest of less than 7%. This is a positive sign for first time home buyers looking to reduce their interest burden. 

Besides the repo rate, certain strategies followed by borrowers can aid in leveraging such savings and managing the debt efficiently.

How to secure a housing loan at the lowest interest rate?

• Improve CIBIL score Generally, lenders prefer applicants with a credit score of above 750 and consider them creditworthy. Applicants can increase their credit score by repaying their existing debt, maintaining a 30% - 40% debt-to-income ratio, etc. Using a home loan eligibility calculator can help you assess whether your current credit rating is sufficient to avail loans from specific lenders.
• Repay outstanding debt Paying off the existing debt can be a smart way to increase the chances of getting affordable home loan interest rates. Lenders would be convinced that an applicant is credible enough to make timely repayment and extend additional benefits.
• Opt for a short tenor To leverage the benefits of current home loan interest rates, individuals can opt for a short tenor. This would aid them in paying off the outstanding balance faster. However, applicants should choose the tenor depending on their financial capability. Technically, a short tenor encourages lenders to quote an affordable rate, but it also increases the EMI outgo. To determine the ideal repayment structure, it is suggested to use a home loan calculator that segregates the payment obligations.
• Maintain lower FOIR Typically, a FOIR of less than 50% works in favour of applicants. With the help of FOIR, lenders can determine applicants’ existing financial liabilities. As a result, it helps gauge whether they would manage home loan EMI repayment on time or not.
• Apply for a joint home loan Applying for a housing loan with a co-applicant is the best way to acquire the most favourable home loan interest rates. A point to note here is that this would only work if the co-applicant has a stable income source and 750+ credit score. Moreover, applicants should also know the tax benefits on a joint home loan to maximise savings.
• Choose a property with high resale value Most lenders give preference to properties with high resale value. This increases the chances of gaining a high loan value at lower home loan rates. Individuals must select properties that are located properly to take advantage of the best current home loan interest rates. This would streamline both the purchasing and loan application process.
• Refinancing Existing home loan borrowers can also bring down their monthly obligation by refinancing. When the debt-to-income ratio crosses 40-50%, then home loan balance transfer is justifiable. Since there are charges involved in the process, individuals should evaluate when to undertake a home loan balance transfer beforehand.

During refinance, borrowers must also seek pre-approved offers, which simplify the application process considerably. Such offers are available on several financial products, including home loans and loan against property. Check your pre-approved offer with just your name and contact number today.

Besides the mentioned tips, individuals can enhance the chances of securing lower home loan rates by maintaining a stable income structure.

This would boost their creditworthiness and aid in gaining the latest schemes to buy a house. Moreover, to make borrowing costs manageable, individuals should keep track of current home loan interest rates and additional charges. This is the best solution to make home loan borrowing successful.