The interest rate on the home loan is an important factor in the structure of your home loan. It is the primary factor in your monthly EMI status and the Loan cost. Receiving the interest rate on a home loan is the leading step toward healthy financial planning. So when we talk about the interest rate on the home loan, you have to spend your time, do the proper research, and choose one that best fits you.
Classification of interest rates on home loan
There are two different types of interest rates on the home loan: fixed and floating interest rates. The classifications of the interest rate on the home loan will be based upon the selection. You have to focus on your requirements and choice.
- Fixed interest rate: Fixed interest rate home loan is that type in which the interest rate is locked for the tenure of the loan. It indicates that your EMI will not vary even if the market changes occur.
- Floating interest rate: A floating type of the interest rate on the home loan is the one in which the interest rate is revised every quarter. This interest rate will be associated with the base rate or the MCLR (Marginal Cost of Funds Based Lending Rates), depending on the lender policy and its adjustments.
On which factors is the interest rate on a home loan calculated?
You can calculate the interest rate on the home loan on the EMI calculator that better determines your EMI for the given tenure and the amount. This has many benefits, such as flexibility and efficiency in financial planning. The factors on which the lender calculates the interest rate are given below.
- Market conditions
- Lender risk policy
- Age criteria
- Your income
- Credit score and history
- Nature of employment
- Value and nature of the property
- Existing debts
Reduce the home loan interest rate
You can reduce the home loan interest rate by taking steps towards the given points.
- Increase the repayment tenure: You can reduce the interest rate on the home loan by opting for a higher repayment tenure. For this, you can use the EMI calculator’s help to choose the tenure so that the monthly EMI best fits your budget.
- Go for a higher down payment: Increasing your down payment at the availing time of the loan is suggested so that the loan amount you need is lower.
- Consolidation of Loans: If you opt for more loans, it will make the need to consolidate into one. The best factor is that it lowers your EMI.
This article will bring all the information about the interest rate on the home loan. It will bring you the best way to reduce the interest rate on the home loan.
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