A loan against property is a secured loan offered against any commercial or residential property. This type of loan is popular mainly because loans against property interest rates or mortgage loan interest rates are lower than that of other types of loan and the funds thus got can be used for any purpose.
If you are planning to avail of a mortgage loan, you must try and avail of the lowest mortgage loan interest rate you can get. This will help you repay the loan in a comfortable manner. Here are a few tips that will help you reduce your mortgage loan interest rates.
Tips to Reduce Mortgage Loan Interest Rates
Good Relationship with the Lender
Sometimes keeping or maintaining a good relationship with the lender may offer you an advantage like attractive interest rates on loans against property. Borrowers having a long credit history and an impeccable payment record are usually offered lower rates of interest than other individuals.
Also, you may look for festive and seasonal offers that the lender is offering as during the festive season, the lender offers their lowest interest rates to entice customer.
Have a Co-borrower
When availing of a mortgage loan, you can avail yourself of lower loan against property interest rates by adding a co-borrower with excellent credit score. This gives lenders the chance to assess the loan application based on the combined income and repayment capacity of both individuals, thus improving the chances of loan approval. With reduced risk of loan default, the interest rates are always lower.
Shorter Loan Tenor
The property loan tenor that a borrower opts for also affects the interest rates on the loan against the property. The shorter the loan repayment tenor, the lower will be the interest rates as the risk for the bank is lower.
However, in the case of longer tenors, the possibility of the borrower defaulting is greater, leading to an extended risk for the bank. This increases the interest rates on long-term loans.
High CIBIL Score
One of the most important factors that influences the interest rates on mortgage loans is the credit score or CIBIL score of the borrower. So, a 750+ CIBIL score for a property loan is a must. A high CIBIL score shows the borrower’s credibility and history of paying all debts and EMIs on time. Having a high credit score gives the borrowers the chance to negotiate with lenders for competitive interest rates when availing of a loan against property.
Utilizing Prepayment Option
Prepayment allows you to reduce your loan burden earlier than scheduled through a lump sum payment. You can either do a part-prepayment or a complete foreclosure. In the first case, you pay only a part of the outstanding loan liability before the loan tenor’s end.
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In the second case, you repay the entire loan liability at once, affecting the closure of the loan account as well. Opting for any of the two can help reduce the interest liability burden.
Refinancing the Loan
By transferring the outstanding balance of your mortgage loan to a new financial institution offering reduced interest rates and other favourable terms of financing, you can save on the overall interest and loan repayment liability significantly. This can be of great help to borrowers who still have a long repayment tenor.
Loan Against Property EMI Calculator
A Loan Against Property EMI calculator is an online tool provided by lenders that helps to calculate the monthly instalments to be paid towards the loan amount by a borrower. The calculator provides accurate results based on details, such as loan amount, interest rate, and loan tenor.
Thus, a mortgage loan EMI calculator provides a clearer picture of the situation to the borrower while availing of a loan against property.
Now that we know all about how to get low mortgage loan interest rates, let us look at how one can apply for a loan against property.
How to Apply for Loan Against Property
To apply for a loan against property, follow these simple steps:
- Go to the lender’s website and fill the mortgage loan online form
- Enter your personal and property details
- Submit the loan application form with the supporting documents
- The bank representatives will then evaluate the documents and property details
- Once approval is received, the funds will be disbursed within 72 hours*
Home Mortgage Loan Interest Rates
Mortgage loan interest varies between 8.15% to 11.80% p.a. Having good terms with the lender and having a good payment track record can also make you credible for attractive mortgage loan interest rates.
Thus, now you are aware of some easy ways and tricks of reducing your loan against property interest rates. Each lender may offer different interest rates, but you as a borrower must know how to reduce your mortgage loan interest rate burden. Knowing this, you can plan your finances in advance before applying for a mortgage loan.
Also Read : Top 10 Myths About Loan Against Property
So, whether you want funds for your business expansion, or for your next trip to Europe, get funds quickly through a mortgage loan. You not only get funds here for lower interest rates but have the freedom to use them for any purpose as per your requirement.