The first and the most important strategy to
negotiate your interest rate on home loans is to constantly update yourself
with what different lenders are offering.
At present, customers have a plethora of options
available from banks and financial institutions with regards to home loans and
their interest rates. Today, banks and financial institutions also offer
flexible interest rates for different income categories. Here's a few tips to
negotiate your interest rates on home loans:
Information:
The first and the most important strategy to
negotiate your interest rate on home loans is to constantly update yourself
with what different lenders are offering. One should check both the fixed and
variable home loan rate and then compare the two against each other. Figuring
out the loan eligibility on the basis of information collected from agents is
another crucial pre-requisite before deciding to opt for a home loan. Such discussions
also help consumers in deciding relevant issues such as type of interest rate
tenure, other charges etc. Exercises like this will also protect the borrower
from getting misled by lenders who often use various jargons to lure customers.
Having all the information you require can also be
useful for someone who has already availed a home loan. It will help him/her
learn if they are paying an extra amount and also if another bank or financial
institution could provide a better rate. The facts on the rates offered by
different banks and financial institutions will help the borrower discuss the
situation with more authority and this may further lead to the lender agreeing
to a better rate for the existing home loan. This helps as from a lender's
point of view it is easier to retain an existing customer than to get a new
one.
One could also opt for a balance transfer in case
another bank or financial institution is providing a better rate, but such a
decision should be taken only after weighing all the pros and cons. The
borrower should get a clarification from the new prospective lender on all
start-up fees involved with refinancing the existing home loan besides asking
the existing lender to explain the costs involved in paying out the loan. The
transfer process should only be initiated after there is a clear indication
that the move will save money.
Credit
score:
In today's time, a good credit score helps the
borrower negotiate his/her loan and interest rate, processing fees, pre-payment
penalty and all the other charges involved while purchasing a property. Most
banks and financial institutions believe that customers with a sound credit
rating are less likely to default on the loan amount. Borrowers with salary
accounts or credit cards can also avail further discounts on processing fees
and prepayment penalties from banks.
In case one has a poor credit score certain steps
should be undertaken to help set things right. One could take start making
payments, whenever due without delaying them any further, by not utilizing the
maximum limit on your credit card , pay off any debt etc.
Documentation:
There is no substitute to effective documentation
while availing home loans. This gives banks the confidence about the borrower's
credibility and repayment capacities thus helping in securing loans. The
document filing is also an important step in this process as it is highly
unlikely for a bank/lender to offer a best possible quote until the documents
are submitted. One must be completely honest about existing debts, credit
cards, and repayment history to all lenders to give a clear idea about their
existing financial position. This will also help individuals to negotiate home
loans better by enhancing their credibility as banks will also check the same
with the Credit Bureau about the credit worthiness of the individual.
Another important point to keep in mind before
availing a home loan is approaching prospective lenders only after the property
is finalized and disbursement is required in the next few days. Most lenders
are interested only in disbursements and reserve their best rates only for
immediate disbursement cases.
Time
your loan:
Borrowers should look at timing their loans towards
the end of the month or quarter for better rates. Banks and financial institutions
have pre-defined sales targets for its staff towards the end of the
month/quarter and may offer competitive rates to complete their targets.
One should also look at timing their loans towards
the festive season as lenders tend provide incentives in terms of lower
interest rates and processing fees during this period to encourage sales.
Larger
customer:
Bundling loan requests with friends & relatives
to offer a larger business opportunity to banks and financial institutions is
another tactic one can use for negotiating home loan rates. This is possible as
banks and financial institutions would be saving on their legal and technical
costs relating to property title, valuations, etc.
Conclusion:
Getting a home loan is becoming a hassle free/simple
procedure with financial institutions increasingly focusing on shortening the
entire process. Lenders are giving applicants an option to fill the application
form online besides providing on-ground assistance of home loan advisors to
assist them. With the increasing competition, financial institutions may go all
out to offer home loans at competitive rates and make the entire process
simple, but customers should sign up for home loan emi calculator only
after ensuring that they are getting the best deal from their financial
institution.
Source: http://checkthis.com/emiforhomeloan
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