Were You Aware of These Uncommon Aspects That Can Influence Your Home Loan Interest Rate?

For most individuals, buying a house is considered to be one of the most significant achievements of their lives. With real estate prices being so costly, it becomes difficult to buy a house by simply relying on personal savings. This is why many homebuyers apply for home loan plans in order to get the financial assistance that they require. However, there are some who are worried about taking such loans, and this is because of their interest rates. A high home loan rate can result in higher monthly instalments, something that borrowers look to avoid. 

However, it is not necessary for you to take a home loan that has a high interest rate. Financial institutions take into account certain factors when it comes to setting home loan interest rates. The most obvious ones are credit scores and market conditions; however, there are some other factors that are not so well known. 

So, take a look at a few uncommon aspects that can influence a housing loan interest rate:

1.Stability of the borrower’s income 

If you are working at a company where there is no stability in monthly income, it is quite possible to face difficulties in clearing existing debt. No financial institution would like an applicant who has taken a loan and is without a stable job. This is why they only prefer applicants who have a steady income. In fact, a borrower with a good employment record can even be offered lower home loan interest rates. 

2.Location of the property 

If the property you are purchasing does not have decent amenities, a good neighbourhood, or is not so well connected, its value might drop. It is very likely that such a property would not have a great resale value, which is not profitable for a lender. This can influence the interest rate to go up. So, do keep in mind that the location of the property can have a say in the interest rate of your home loan. 

3.Tenure for repaying the loan 

Not many borrowers are aware of the fact that even the repayment tenure they choose can have an impact on the interest rate of their home loans. If the tenure is longer, it increases the risk for a lender, and the interest rate can go higher. However, choosing a short tenure and repaying the loan quicker can help in bringing down the housing loan interest rate. 

Before applying for a home loan, it is very important to make sure that you are aware of the factors that influence the loan’s interest rate. It is also advisable for any borrower to first make use of a home loan EMI calculator before they apply for a home loan. This calculator is an online tool that displays the loan’s EMIs based on the loan amount, repayment tenure, and interest rate. After looking at the EMI results, you can decide whether the current interest rate being offered is affordable.