There has never been a better time to get a home loan, with rates currently at a 15-year low. Most large banks are currently offering housing loans with interest rates that are less than 7% per year. Borrowers will be able to get the most out of a home loan product if they exercise due caution.
Here are some tips on how to grab the most profitable home loan deal:
Contact a bank or a reputable HFC
Before the crisis, non-banking housing finance companies could have been a borrower's first choice for loans, exposing the lenders in this segment's vulnerabilities. As a result, it is currently recommended that borrowers only approach banks or large housing finance companies for their borrowing needs. It is worth noting that because banks are directly supervised by the RBI, transmission of policy rates is much faster here. The same cannot be said for the majority of NBFCs and some HFCs.
Build a better credit score
Because banks place a high value on borrowers' risk profiles, those with high credit scores may be rewarded with lower interest rates. Home buyers have an opportunity to improve their credit score at a time when loan default rates are expected to rise due to the Coronavirus pandemic.This could be accomplished by avoiding repayment delinquencies. Buyers who are in a position to pay their loans without applying for the moratorium schemes that banks are launching in the midst of the economic slowdown, for example, should avoid such schemes. This would have a positive impact on your credit report.
Choose a home loan with a fixed interest rate
Despite the limitations of this product, it would be a prudent financial decision to choose a fixed rate of interest in the current climate. Despite the fact that these loans are more expensive than floating interest rate home loans, they may be a better option because rates are likely to rise once normalcy returns, making floating home loans more expensive. It is important to note that fixed rate loans are only fixed for a set period of time, as specified in the loan agreement. At the end of this period, it would be up to the bank to charge the market interest rate.
Avoid adding a co-borrower
Banks will almost always advise you to take out a joint home loan in order to obtain a larger home loan amount. This could be a financial miscalculation at a time when job security is uncertain due to the COVID-19 crisis. There are two reasons why you should avoid having a co-borrower. To begin with, there should be no need to increase the loan amount. Any debt is a liability, and you must repay every rupee in the future, regardless of your circumstances. Just because the bank thinks you're eligible for a loan of, say, Rs 1 crore does not mean you should take it, even if you could get by with Rs 80 lakhs. Second, by adding a co-borrower, the co-borrower becomes equally responsible for the loan's repayment. In these uncertain times, it would be best if you avoided involving other family members in borrowing arrangements if possible. If you still need other brilliant tips and suggestions, just contact salt finance.
Salt Finance is a boutique home loan & car loan specialist helping hard clients to get a better deal, save interest and own their homes sooner. We are located at Mortdale, NSW.
Salt Finance is ready, call us now!
