How to Avail the Lowest Home Loan Interest Rate?

Residential properties under the real estate sector, especially the budget housing segment, witnessed tremendous growth in the recent years. Several Government of India-backed initiatives introduced to boost the reach of this are likely to push the demand for home loans in the country to almost 19%.

Interest rates on home loans were reduced by a significant margin since the RBI decided to reduce policy rates to revive the market. The apex bank decided to reduce the repo rate by 40 basis points, bringing it down to 4% and reduce the reverse repo rate by 40 bps as well, to 3.35%.

The reduction in the rate of interest serves well for the extremely competitive home loan segment. Prospective borrowers can easily benefit from the lowest home loan interest rate by thoroughly considering the available options, and following some tips that can help them avail the lowest available rates on home loans in India.

How to get the best interest rate?

The availability of several different types of home loan options for eligible applicants allows them to select the best financial product according to their unique requirements. Usually, home loan interest rate varies among different financial institutions. Lenders may also charge different rates depending on the eligibility criteria, financial history, repayment capability, and current obligations of a borrower.

Naturally, if a borrower attests to favourable conditions as mentioned above while applying for credit, he or she is likely to receive a competitive rate. It can be considered as one of the top tips to reduce home loan interest. Let’s discuss it further.

Apply with a high CIBIL score –

CIBIL score is one of the most important factors that lenders consider while processing an individual’s loan application. It also affects the applicable interest rate for the credit option.

A high CIBIL score indicates a robust repayment history without any incidents of defaulting. Applicants are likely to get the lowest home loan interest rate if they carry a score of 750 or above, as the risk associated with lending is considered less compared to an applicant with a poor credit score.

Make a higher down payment –

It is advisable to make a higher down payment while availing a home loan to reduce the applicable interest rate. The total quantum of credit is one of the crucial factors that impact the home loan interest rate.

Borrowing a smaller amount will now only lead the lender into allocating a competitive rate of interest, but it will also keep the payable EMIs to a minimum.

Show low debt-to-income ratio –

An applicant’s debt-to-income ratio indicates the amount he or she is obliged to expend towards repayment in relation to his or her income.

A low debt-to-income ratio implies that an individual is likely to carry a high repayment capability, without compromising on his or her obligatory expenses.

It is the reason why lenders are likely to offer the lowest home loan interest rate to individuals with minimum financial obligations.

Show a credible source of income –

Borrowers with a steady employment history (of at least two years or more) are much more likely to receive better interest rates from financial institutions.

Working at a reputed organisation is also likely to help secure an affordable rate, as lenders will be less likely to consider the debt as high-risk in such cases.

Select a longer tenure –

A longer repayment tenure, although not reducing the interest rate, will lower the interest liability as it will result in a division of the total interest payable over more number of months.

However, an applicant should keep in mind that an extended repayment tenure will increase the total cost of repayment.

One can use a home loan EMI calculator to determine the payable EMIs depending on the loan tenure, interest, and principal amount.

Apply with an existing lender –

It is possible to avail a competitive home loan interest rate if an individual applies with a financial institution as an existing customer.

In this case, the lender will be familiar with the applicant’s financial standing and repayment pattern, which will also help reduce the time taken for an application significantly.

Borrowers are also likely to get better terms and offers from their financial institution.

Some financial institutions even provide pre-approved offers to their existing customers, which further streamline the application process.

Such offers are available on home loans, loans against property, and several other financial products. You can check your pre-approved offer online by sharing only some essential details.

Following the above-mentioned tips will surely help a prospective borrower secure the lowest home loan interest rate.

However, while applying, one should also carefully consider other fees and charges associated with the credit, as these can increase the overall cost of the advance by a substantial margin.

Related Posts


We At Geeksscan Try to Serve the best quality of content to our readers. If you want to Post on our website or have any suggestion then contact us @