Home loans have become one of the easiest ways to finance the purchase of a residential property. Until a few years ago, people either saved through the years or borrowed money from friends and family members to fulfil their dream of homeownership. Unfortunately, borrowing money from friends and family members can lead to souring of relations and spending one’s entire savings on a home is never a great idea. 

Over the last few years, the popularity of home loans has increased significantly and people now avail of home loans to fulfil their dream of homeownership. Home loans are loans sanctioned primarily to buy a residential property. Home loan interest rates are quite low and therefore, these loans are considered highly economical. To establish your candidature for the lowest interest rates and to secure an affordable home loan, here are a few simple things you can do.

Affordable Home Loans: Here Are a Few Simple Tips and Tricks That Will Help 

1. One of the first things that you need to do if you wish to secure an affordable home loan is apply for a loan with an excellent CIBIL score. An excellent CIBIL score is indicative of a loan borrower’s ability to easily repay loans on time. These are people who are quite unlikely to default on loan repayment. Therefore, not only does loan approval come easily for these individuals but they are also able to secure the loan on the most beneficial loan terms and conditions, including lowest home loan rates. 

2. Opting for a low LTV ratio will also work in your favour. LTV Ratio is the percentage of your property’s net market value that you are asking to be sanctioned as a loan. When you opt for a high LTV ratio loan, you essentially ask for a high loan amount, which increases the chances of loan default and therefore, lenders charge a high rate of interest on high LTV ratio loans. If you are planning to apply for home finance, make sure to save as high a down payment as possible.

3. Maintaining job and income stability will work in your favour as well. People with stable incomes and jobs do not default on loan repayment. Therefore, when people with a stable job and income apply for a loan, they can secure the loan on the most beneficial loan terms and conditions. If you switched jobs recently and are planning to switch jobs again, wait until after you have secured the loan. 

4. The government of India offers many housing schemes to make homeownership accessible to all. If you qualify for any of these schemes, you will be able to secure home finance at subsidized rates and will be able to save money in the long run. 

5. If you are an existing home loan borrower who wants to make their loan affordable, you must consider doing partial prepayments whenever possible. Individuals on floating interest rates can prepay their loans at any time they want without paying any penalty or fee. When you prepay a loan, the principal comes down. This either leads to a reduced loan tenor or lower EMIs. Whatever option you choose to go with, a home loan prepayment will certainly help you save on interest and make your home loan more affordable. 

6. Yet another thing that existing home loan borrowers can do to make their home loans affordable is opt for a home loan balance transfer. A home loan balance transfer is a facility that allows existing home loan borrowers to transfer the existing balance on their home loan from their current lender to another offering better loan terms and conditions. People opt for a home loan balance transfer mostly to benefit from a lower rate of interest. By switching to a lower rate of interest, you will be able to reduce the cost of borrowing money and make your home loan affordable. 

Final Words

These are some simple tips that will help you secure an affordable home loan. Doing thorough research regarding what each lender is offering and what you are eligible for and negotiating with each of the lenders separately will also work in your favour.