Know if Home Loan Interest Rates are Negotiable or Not

Usually, applicants with a clean credit history and a stable source of income are more likely to land attractive rates of interest against a home loan. However, one must note that housing loan interest rates are decided based on several factors, including – an applicant’s creditworthiness, repayment tenure, down payment, etc.

In this regard, there are a few practical ways that often come in handy for applicants and allow them to negotiate better terms of service and repayment.

Individuals should try to put these following into practice for a successful negotiation of loan interest –

Compare interest rates

Before applying for a housing loan, individuals must gain an idea about the prevailing home loan interest rate offered by leading financial institutions to both new and existing borrowers. Usually, an existing customer who possesses a clean repayment history is more likely to secure better rates.

Maintain a clean credit record

Individuals should try to improve their creditworthiness to secure lower interest rates. The most effective way of doing so is by repaying the debt on time and maintaining a low credit utilisation ratio, preferably between 30% and 45%.

Maintain a stable source of income

Financial institutions prefer applicants who have a stable source of income as it indicates greater creditworthiness. Consequently, individuals should try to increase their source of income and land a steady job to improve their chance of securing an attractive housing loan interest.

Consider refinancing

Another effective way to negotiate interest rates of a home loan is through balance transfer. However, individuals must verify if the interest rate offered by the new lender and other charges are lower than what they are paying currently.

Also, existing borrowers may avail a top-up loan on their existing home loan and negotiate for a better rate of interest and repayment schedule from the lender. Nonetheless, it will prove most effective if you have been diligent in paying your housing loan EMIs on time.