Home loans are often a necessity when purchasing a new home or refurbishing your existing one. When applied, the lender is able to provide the necessary sum of money. Here are some of the basic steps to follow when applying for a home loan –
- Obtain a loan application form from the lending party
- Fill and submit the form
- Produce the necessary documents required for home loans in India (salary certificate, proof of residence, etc.)
After careful examination of the form and the documents, the loan will be approved and the sum will be sent to the borrower’s bank account. In return, the loaned sum is paid back to the lender in the form of monthly EMI payments, which incur a certain interest amount.
How to get lower home loan interest rates
As stated previously, the loan repayment is carried out in the form of EMI payments, each of which incurs a specific amount of interest that accumulates over a period of time.
However, there are a number of ways through which you can actually minimize the interest rate and subsequently reduce the loan repayment amount. Some of these steps are –
Comparing the different home loan schemes
Whether it is a home loan for a salaried individual or for someone else, acquiring the most value-friendly loan scheme is one of the prime prerogatives for any prospective lender. With the help of online sites, the borrower is able to obtain detailed information regarding the home loan schemes. Attributes such as loan amount, interest rate, down payment period etc. are all notable factors to attaining a home loan with a lower interest rate.
Backing home loans with mortgage guarantee
In mortgage-guarantee backed home loans, the specific asset is mortgaged to the lender. The main purpose of this is to ensure that loan payment default protection. Additionally, this option provides a number of benefits to the lender as well, such as –
- Reduced home loan interest
- Discount in loan down-payment
- Protection from loan default
Switching from base interest rate to MCLR
Through the home loan conversion scheme, borrowers are able to switch to the MCLR (Marginal Cost of Lending Rate) from the base loan interest rate, and incur a dramatic reduction in loan interest rates.
