Availing of a truncated interest rate for a property loan can be a challenging task for prospective borrowers. So, proper planning and systematic work are necessary to increase the likelihood of obtaining a competitive rate on credit.
Therefore, one needs to be aware of the variables that influence the property loan interest rate in order to accomplish this. Typically, it combines several factors, such as the RBI’s current monetary policy, credit score, the property’s size and location, the loan’s duration, etc.
Factors affecting the property loan interest rate
To know about the current interest rate on a property loan, it is best to discuss your needs with a lending institution. Apart from this, prospective borrowers should also know certain parameters that affect the present interest rate on a property loan.
- Monetary policy of RBI
The monetary policy rates: repo and reverse repo rates are under the authority of the Reserve Bank of India. These rates are vital because the interest rate on any type of mortgage loan varies based on the movement of these rates. So, to know the current interest rate, have a close look at these, as this will give a fairly good idea about the current market situation.
- Property location and its age
Mortgage loan interest rates are frequently determined by a property’s location and age. For instance, homes in desirable areas with excellent amenities draw more purchasers and thus have a higher resale value. As a result, financial institutions are more likely to offer an interest rate that is compatible with such assets.
Besides this, the age of the property is equally important. For example, in contrast to a candidate mortgaging a home only 15 years old, the chances of obtaining better rates are reduced if a home is between 40 and 45 years old.
- Credit score
Lenders use this three-digit number to evaluate a candidate’s credit history and as a benchmark when determining a borrower’s creditworthiness. So, borrowers who have a better CIBIL score for property loan can typically use it as leverage to obtain a more favorable interest rate on their property loan.
Additionally, note that most financial organisations consider any credit score over 750 to be good, and candidates with higher scores might be eligible for lower interest rates.
The down payment plays a crucial role in deciding interest rates, as the actual amount available as credit is only a portion of the entire property’s value. For instance, if individuals apply for a home loan of Rs. 1 crore, they will likely receive a loan amount of Rs. 80 lakhs, with the remaining amount to be paid as down payment. So, increasing one’s down payment can lower the overall balance and allow one to gain an affordable interest rate.
With a LAP, the borrower may be required to make EMI payments for ten to fifteen years, but it can be higher depending on the financial institution. This longer tenor will make EMIs more affordable and easily manageable. Conversely, if borrowers opt for a shorter property loan tenor, they might need to pay higher EMI.
After knowing the value of the current interest rate, prospective borrowers can also opt for a loan against property EMI calculator for calculating their EMIs. So, if applicants are new to this calculator, they must know that it is an easy to use online tool to help you calculate your monthly payable.
Steps to use the loan against property EMI calculator
Step 1: Visit the official website of your preferred LAP loan lender.
Step 2: Then navigate to the property loan EMI calculator page.
Step 3: Lastly, provide details about the tenor loan amount and interest rate to receive financial information.
In India, several financial institutions offer pre-approved loans to expedite the loan application process. These offers are available on selected financial products like home loans, loan against property and others. To apply, an applicant needs to enter his/her name and contact number to check their pre-approved offers.
So, to know the current property loan interest rate, it is ideal to have a conversation with the concerned lending institution. This way, they can evaluate an applicant’s profile and will provide the best possible deal.