Home Loan Interest Rates: Compare Today's Lowest Rate April 2021

In its recent monetary policy meeting, the RBI has decided to keep the repo rate unchanged at 4%. This is the 4th time in a row that the apex bank has kept its key policy rate untouched since May 2020.

Resultantly, current home loan interest rates are at an all-time low, helping prospective home loan applicants avail affordable deals. However, they need to compare between different lenders and then opt for an offer that perfectly suits their needs.

Along with that, borrowers should also be wary of the factors that can affect the interest rates and work accordingly to find the credits that can satisfy their requirements without burdening their finances.

Top 5 factors that influence home loan interest rates

Here are some notable factors that can change the interest rate of a housing loan –

Existing market rates are one of the most important factors that can influence the current home loan interest rates. Since these market rates vary as per the RBI's policy implementation, borrowers can keep an eye out for any announcement from the apex bank to get the best possible interest rates on their housing loans.

Housing loan interest rates are also affected by the credit profile of an individual. Before approving a loan application, lenders evaluate the credit score and repayment history of a borrower.

Hence, applicants with healthy credit score and a respectable repayment history can negotiate and avail a more competitive rate of interest. At the same time, they can keep in mind the factors that affect home loan eligibility and work accordingly to avoid such issues.

The down payment amount can also influence the home loan interest rates. Since financial institutions consider loan application with a substantial down payment of 20% or more as a low-risk proposition, they can extend a better interest rate to such applicants.

Individuals can easily use different online calculators to find the ideal down payment amount that can fetch them the lowest home loan interest rate.

The interest rate of a home loan also depends on its tenor. Credits with a shorter repayment tenor often attract lower rate from financial institutions and vice versa.

The location of a property plays an important role in deciding the interest rate on home loans. In case individuals opt for a house at a favourable location with great amenities, such properties are more favourable to lenders. The reason being, they hold better resale value compared to a property in a remote location. Considering this pointer, creditors can extend a more competitive housing loan interest rate.

Apart from these major pointers, an individual's income profile or employment type can also influence home loan interest rates. Typically, the rate of interest for salaried individuals often differs from the one offered to self-employed borrowers.

Being aware of the factors that affect the current home loan interest rates can help individuals in availing a better deal. To further improve on this pointer, they can take the following tips into consideration –

Part prepayment is one the easiest way to reduce interest payment on home loans. It may not reduce the rate of interest, but paying a lump sum amount before the due date will lower the principal loan amount, which in turn will reduce the total interest burden.

Opting for a home loan balance transfer can allow individuals to find the most competitive interest rates in the market. However, it is pertinent for individuals to know everything about home loan balance transfer before applying.

Considering the interest rate in advance will help borrowers find a deal that will meet their requisite. Besides, to increase the convenience further, lenders have introduced pre-approved offers. Available on housing loans, loans against property, etc., these offers streamline the application process and saves time. Applicants can check their pre-approved offer by providing their contact details like name and contact number.

Current home loan interest rates present a great opportunity for prospective home buyers to avail credits at a discounted rate. However, before signing a loan agreement, they should keep in mind the pointers mentioned above and make a decision accordingly.