What is the Interest Rate on Home Loans in India Right Now?

When someone declares that they are planning on applying for a home loan, the first advice they get is that they must try their best to negotiate for the lowest interest rate possible. Low interest rates help borrowers keep their EMIs within the affordable range and reduce on the total interest outgo. So, what are the current home loan interest rates in India and how can one avail of a low interest rate home loan? 

Most lenders offer home loans on floating interest rates. In the case of floating interest rate loans, the rate of interest on loans depends on the Repo Rate, which is the rate at which the Reserve Bank of India lends money to commercial lenders within the country. The Covid-19 pandemic hit the real estate industry badly and to boost the sector, the RBI lowered the Repo Rate to the lowest it had been in a long time. Though the RBI has been increasing the Repo Rate slowly, the home loan interest rates are still the lowest they had been in a long time. Currently, home loan interest rates vary between 7% and 14%. The home loan interest rate a borrower gets offered depends on several factors, such as the borrower's age, credit score, income profile and job stability, etc. If you want to avail of a low interest rate home loan, here are a few tips that will help.

- To start with, lenders extend their best home loan deals and lowest home loan interest rates to borrowers who have a credit score of 750 or above. Such a credit score indicates high creditworthiness. Borrowers who always repay loans on time and borrow responsibly have such a CIBIL score. Thus, lenders know borrowers who have a credit score of 750 or above make trustworthy and reliable clients and therefore, they extend loans to such individuals at low interest rates. If you are applying for a loan, make sure your credit score is at least 750. 

- Lenders also approve loans easily and extend their best home loan deals to borrowers who can establish job and income stability as a stable job and income enhances one's ability to repay loan EMIs on time and reduce cases of loan default. 

- Another way to avail of a loan on low interest rates is to opt for a short tenor. A long tenor increases chances of loan default and therefore, the risk involved for the lender in giving out the loan. A short tenor reduces the risk for the lender and therefore, lenders charge a low interest rate on short-tenor loans. The same logic applies when borrowers ask for a loan amount lower than what one is eligible for. In this case also, lenders agree to sanction loans on low interest rates. 

- Lastly, if you want to avail of a home loan on low interest rates then apply for home loan with a lender with whom you already have an existing relationship. Lenders extend their best home loan deals to their most loyal customers. You can also consider applying during the festive season as during the festive season, all lenders slash their home loan interest rates. 

The current home loan interest rates are the lowest they have been in a long time. So, now is the perfect time to apply for a loan.