As the RBI imposed a new repo rate,the rate of interest has changed. The current home loan interest rates rangebetween 6.5% and 9.5%. There are various other factors, along with the repo rate, that affects your rate of interest. Here are some of the factors that directly impact your rate of interest.
Home loan interest rate trends
The home loan segment has witnessed drastic changes in the past year.The RBI's decision to lower the repo rate by a good number of points on March27th, 2020, took this policy rate down to 4.4%, creating a favourable borrowing condition for prospective home buyers. Prior to this repo rate cut, home loan interest rates were sailing well over 7-7.5%, but the situation changed almost overnight with this announcement.
Other factors that affect home loan interest rates
Credit score: With a high credit score, you are eligible for a home loan. It becomes easy and affordable for youto get a home loan at a low rate of interest. If you want a low rate of interest, all you need is a high credit score that is above 750. It will help you deal with borrowing in a better and more affordable manner.
Income: A high-income individualalways gets its perks and benefits. You can easily get a low rate of interestas the risk associated with a high earning individual is low. When the risk is low, the rate of interest charged by the loan provider will also be very low.
Amount of loan: The amount of the loanwill directly impact your rate of interest. If you are taking a high amount,your rate of interest is low. For a low or small home loan, you will get a high rate of interest. So, make sure you are borrowing the right amount and avoid any wastage of money.
Tenure of the loan: The tenure of theloan will decide your rate of interest. When you opt for a long-term loan, therate of interest will be low as there will be many months to divide the rate of interest. For a short-term loan, the rate of interest every month is high.
Loan provider: It depends upon theloan provider from whom you are taking a home loan. This is why it is importantto find the right loan provider so that you get an affordable loan. The more you compare, the better rate you get.
Final words,
If you feel that your EMI or rate ofinterest is high, you can consider a homeloan balance transfer. It helps you to get better rates on your existing home loan, a suitable tenure, and atop-up loan too.
