How to Reduce Home Loan Interest Rate?

Hi Aishariya, I believe that everyone should be aware of how crucial it is to maintain a high credit card score, or CIBIL score. Nearly a year ago, I took a home loan at the lowest rate possible from ICICI Bank because my CIBIL score was higher than 800. So, apart from whatever is mentioned on how to reduce home loan interest rate, you must also keep in mind that you can decrease the rate of interest on your home loan by improving your credit score. Let me share a few more tips.

How to Reduce the Interest Rate on Home Loan?

As per my experience, I am saying lowering interest rates is one way to lessen your financial burden and stress. You can reduce the rate on home loan by any of the below techniques:

Improve Your CIBIL Score

As I already mentioned, higher credit score borrowers are usually offered lower interest rates by lenders. There is a reason behind that, which I came to know from my manager. He informed me that if you have a good CIBIL score, then you are viewed as less hazardous borrowers. 

If your score is low, no need to worry about that. Your credit score can be raised and possibly even lowered the interest rate by regularly paying your bills on time, cutting debt, and refraining from asking for new credit.

Refinance Your Home Loan

This is another technique on how to decrease home loan interest rate which I came to know from one of my banker friends. She said this can be a practical method for lowering your interest rate. You may be able to transfer to a new loan with a lower interest rate by refinancing if rates have dropped since you first received your house loan.

But, it's crucial to carefully check out the costs of refinancing, including processing fees and early payment penalties.

Apart from these 2, you can go through the methods mentioned by Sarmana. I hope you get an idea of how to reduce home loan interest rate.

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How to reduce HDFC home loan interest rate?

Even though we all dream about purchasing a property we also think about home loans and interest rates. Taking a home loan means you will need to pay interest every month for a long period of time. Therefore, purchasing a house is a pretty big deal that comes with a lot of responsibility. Therefore we should learn about home loan interest rate reduction. Since all of us don't have knowledge about finance it can be hard at times to come to a decision regarding home loans. Don't worry! I will share some tips so that you can be on the right path to reduce the home loan interest.

How to reduce home loan interest rate?

1. Tenure

Choose a shorter tenure to reduce your home loan. Even though taking a home loan for longer tenures such as 25 to 30 years will cut down monthly installments, short tenures such as 10 to 15 years can help you reduce the interest drastically. So, choose a shorter tenure instead of a longer one.

1. Prepayments

It is better to make prepayments by paying the principal amount as soon as possible to bring down the interest rate. But you should talk to your bank or lenders before deciding this, because many banks do not provide the option of prepayment.

1. Interest Rates

Before going to a lender check carefully which bank is trustable, provides benefits, and offers lower interest rates. Choosing a bank which has a lower interest rate can definitely help you reduce your home loan interest. Click here to avial home loan at the lowest interest rate of 6.5% from NoBroker

1. Down Payment

If someone asks me how to lower interest rate on home loan I would tell them the best option would be a down payment. The lesser amount you take the lesser interest you will have to pay. So, if you are able to contribute more from your pocket as a downpayment go for it.

1. Increase EMI

If you are switching jobs or getting a better hike you can pay higher EMI every month which in turn will reduce your tenure and at the same reduce the interest rate. You need to talk to your lenders once though before thinking about increasing your EMI. These are the 5 useful ways for home loan interest rate reduction. As far as I know, NoBroker offers the lowest interest rates starting from 6.5%. If you want to apply for a home loan through NoBroker, then check your Home Loan Eligibility in seconds using this calculator:

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Read more: In Which Bank Lowest Interest Rate For Home Loan In December 2021 How To Calculate Home Loan Interest Rate? How To Pay SBI Home Loan EMI Online?