As the repayment tenure for a home loan can go as high as thirty years, any minor change in the Bajaj Finance home loan interest rate or the interest rate offered by other home loan lenders can result in a massive difference in the whole home loan interest cost. As the home loan lenders like Bajaj Finance and others factor in numerous parameters when setting your Bajaj Finance home loan interest rate, having a thorough understanding of certain factors can help you avail a good home loan deal with the lowest possible interest cost. Remember that for home loan buyers, there are various deals and offers in the market, which can endow them with the maximum benefit possible. To start with, if you are looking for a home loan deal as you have finalized on your home, here are some important parameters you require factoring in, which might be of great assistance for zeroing on a specific home loan lender. With these factors given below, you will not only be able to get the best home loan interest rate through lenders like Bajaj Finance in the form of a lower Bajaj Finance Home loan interest rate, but you will also be able to keep your entire home loan interest cost low.
Here are listed some of the crucial home loan factors that help lenders like Bajaj Finance and others to decide on their Bajaj Finance home loan interest rate and interest rate in general for other lenders:
Most of the lenders now have started factoring in the credit scores of the applicants to set their home loan interest rates. Thus, the ones with a good credit score of 750 and above are looked upon as extremely creditworthy; home loan lenders try to attract such applicants by providing a lower interest rate on their home loans. Similarly, those with lower credit scores of below 750 are usually looked upon as the ones lacking financial discipline, and thus home loan lenders try to compensate for their increased credit risk by providing higher interest rates on home loans. Thus, before submitting your home loan application, ensure to check your credit report to know your credit score. Ensure to fetch your report about 6 months before submitting your home loan application, as those with poor credit scores would get sufficient time to take corrective measures to improve their credit score and apply for a home loan with a higher credit score. Submitting an application for a home loan with a higher credit score not just enhances your chances of availing of home loan approval but also allows you to get your home loan at a lower Bajaj Finance home loan interest rate or at lower home loan interest rate, in general, if availed through another lender.
Home loan amount
Opting for a higher home loan amount leads to higher credit risk for the home loan lenders. Thus, they may charge higher interest rates on their home loan from those availing higher home loan amounts. Thus for those requiring a higher home loan amount and at the same time looking for availing lower home loan interest rate should try to repay a higher down payment amount towards their home loan as doing so can permit them to avail home loan at a lower interest rate.
Interest rate type
The interest rate for a home loan can be classified into three types, namely – floating, fixed and mixed interest rate. The floating interest rate fluctuates as per changes in the benchmark rate followed by lenders, while fixed home loan rates remain the same during the entire home loan tenure. Mixed home loan rates remain constant for a specific period; usually, for up to 3 years, it afterwards changes to floating home loan rates. As mixed and fixed home loan rates come with higher risk for lenders, banks and HFCs like Bajaj Finance provide higher Bajaj Finance home loan interest rates on them to compensate for their interest income losses, if any, owing to the massive changes in the interest rate regime.
Home loan LTV ratio is the proportion of property value that the lenders sanction. The remaining amount needs to be funded through the applicant’s own resources in the form of a down payment amount. As lenders require making higher provisions in reference to home loans by allowing higher LTV ratio to their applicants, they compensate for such higher provisioning by providing higher interest rates on home loans from those availing higher LTV ratio. Thus for those home loan borrowers looking to avail of a home loan at lower interest rates should choose a lower LTV ratio. Doing so would help them to reduce their entire interest cost on home loans.
Many financial institutions like banks and HFCs like Bajaj Finance even consider the applicant’s income sources for setting their Bajaj Finance home loan interest rate. Generally, those who are salaried get charged a lower home loan interest rate than the self-employed because the salaried have higher income certainty, which is lacking in the case of self-employed individuals. Among those who are salaried, government and PSUs are extremely preferred by the lenders as such sectors provide the highest income as well as the job stability. They are followed by those working in highly recognized private companies or businesses. Such sectors are usually looked upon to be stable with the potential to face extreme economic downturns when compared with the other private units.
As the credit risk appetite of home loan lenders, as well as their factors for setting the interest rate for an applicant, can widely differ, each and every home loan applicant should ensure to strike thorough comparison among different home loan offers before zeroing on a specific lender. One should start by contacting those financial institutions with whom they already have a good relationship as such banks, or HFCs can provide applicants with preferential home loan interest rates at suitable terms and conditions. This should be followed by approaching online lending marketplaces to compare among lenders and select the most suitable one. Once you zero on a specific lender, ensure to calculate your repayment capacity to determine the lowest repayment tenure possible as per your affordability. Doing so can help you decrease the overall interest outgo on a home loan. One can know their home loan EMI as per their repayment capacity by using the Bajaj home loan EMI calculator that is available online.