The average home loan interest rate in 2023 in India is around 8.5 to 9 per cent per annum. However, the exact rate may vary depending on the lender, the loan amount, and the applicant’s credit score and financial history.
Listed below are a few tips to get a home loan at a low-interest rate in 2023
Improve your credit score
Pay your bills on time, as late payments will have a negative impact on your credit score. High credit card balances can hurt your credit score. Keep balances low and pay them off in full each month. Regularly check your credit report for errors and disputes or any inaccuracies. Every time you apply for credit, it shows up on your credit report and can lower your score. The more debt you have, the lower your credit score will be. Pay off as much debt as possible and keep it paid off. Older credit accounts with a good payment history will positively impact your credit score.
Opt for a shorter loan tenure
Opting for a shorter loan tenure may result in a lower interest rate on your home loan. This is because the lender views a shorter loan tenure as a lower risk and, as a result, is willing to offer a lower interest rate. However, it is important to consider your financial situation and ability to make higher monthly payments, as shorter loan tenures typically result in higher monthly payments.
Opt for a higher down payment
Making a higher down payment on your home loan can help you secure a lower housing loan interest rate. A higher down payment shows the lender that you are financially stable and can make a significant investment in the property, which can reduce the lender’s risk. This, in turn, can result in a lower interest rate on your loan. It is important to consider your financial situation and weigh the benefits of making a higher down payment against the upfront costs involved.
Compare offers from different banks
Compare offers from different banks to avail of a home loan at a lower interest rate in 2023. Verify your eligibility by checking the minimum income, credit score, and other eligibility criteria the bank sets. Research various banks and compare their interest rates, processing fees, and other charges. You can also check online reviews and customer feedback to understand the financial institution’s services better.
Show stability in employment and income
To get a low-interest home loan in 2023, demonstrate stability in employment and income by providing proof of steady employment for a minimum of two years in the same company or industry. Show a stable and consistent income, with increases or bonuses, to demonstrate financial credibility. Provide documentation such as tax returns, pay slips, and bank statements to verify your income and expenses. Avoid frequent job changes or gaps in employment history that can signal instability to lenders. By doing this, lenders will view you as a lower-risk borrower, which may result in a more favourable loan offer with a lower interest rate.
Secure the loan with a property with a higher market value
When you apply for a home loan in India, securing a loan with a property with a higher market value can increase the chances of getting it at a low-interest rate. Lenders consider the property as collateral, and the property’s market value influences their decision to offer a loan at lower interest rates. The higher the property’s market value, the more likely the lender will offer a loan at a lower interest rate.