Income and employment: When evaluating your home loan eligibility, lenders also factor in your income, type of employment and the profile of your employer.Those having no or low credit scores can improve their credit scores by availing lifetime free Step UP Credit Card, a secured credit card co-branded with SBM Bank India Ltd. As a high credit score reflects responsible credit behaviour and financial discipline, many banks and HFCs offer home loans to applicants with higher credit scores at a lower interest rate. Also, banks and HFCs are increasingly using the credit score of the home loan applicants to fix their home loan interest rates. If your credit score from CIBIL and other bureaus is 750 and above, lenders would see you favorably for a home loan. Those who have paid their EMIs and credit card bills in full, timely, and have not been over-dependent on credit in the past are likely to have a good credit score. Credit score: Your credit score is a numerical representation of your credit history.Here are the factors that lenders consider to determine your home loan eligibility and the interest rate to be offered: It needs to be noted that low-interest rates also usually come with stricter eligibility conditions. For borrowers seeking a home loan, they must be aware of the factors lenders look at while processing a home loan application, and have a deep awareness of their own eligibility. Factors Determining Your Home Loan Interest RateĪs home loans are usually high-ticket size loans, banks and HFCs do a careful and detailed assessment of the borrower’s credit history, repayment capacity, income along with stringent checks on the property to be purchased. Such housing loans are best suited for those who got the loan at a low fixed rate and plan to prepay or foreclose it before the floating rate starts. They will initially have a fixed interest rate for a set period, after which it will change into the floating rate of interest. Hybrid Loans – Hybrid rate home loans are a mix of fixed-rate and floating rate home loans. The home loan EMIs will increase or decrease as per the interest rate movement.ģ. Floating Rate Loans – Floating interest rate, also known as the variable rate of interest, is subject to the current market lending rates and thus, they may change during the loan tenure. Applying for a home loan at a fixed rate of interest is better when the current home loan rate of interest is quite low and an upward trend is anticipated in the future.Ģ. Fixed Rate Loans – Fixed interest rate remains the same throughout the loan period, thereby, keeping the home loan EMI constant. Apply Now Types of Home Loan Interest Ratesĭepending on the interest rate, a home loan is of three types, fixed-rate, floating rate and hybrid.ġ.
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