Planning to get your new home or the old one renovated but worrying about the expenses? You can opt for home loan to give shape to your plans. But are you aware of the factors influencing the home loan rates? This article throws light on the following.
Availing A Home Loan Is Influenced by A Number of Factors
When you intend to avail a home loan, numerous factors end up affecting the range of your home loan rate. Whether the same will be low or high depends on certain essential factors. These factors are generally taken into concern by the lenders/lender you deal and it is they who decide the type of home loan that you can avail along with the rate of interest. However, if you get an idea of such factors, you will be able to avail a better loan amount with a reasonable rate of interest, which is way more beneficial. Keep reading this article to get an in-depth idea about such factors.
Some Factors That Affect the Loan Amount You Can Avail and The Interest Rate to Be Paid
Lenders mostly advertise low rates of loan interest so as to grab the attention of a large number of borrowers. And as soon as you fall in this trap, you will find the rate of interest going up with the addition of different clauses which altogether will make you feel like running away. But that does not mean you should escape without learning about the factors in its true sense. Here are some of the factors that influence the amount you can raise as loan and the rate of loan interest you have to pay.
- Credit History– Credit history plays a very important role when it comes to making a loan application and deciding on the rate of interest to be paid. If you have a good credit history, you will be able to get good amount of loan at the lowest rate of interest, whereas bad credit history will result into getting you low amount of loan or the same amount of loan at a higher rate in interest.
- Employment circumstances– If you happen to have a sound income per month along with stable employment circumstances, then the lenders will have their trust on you. This means you will be getting better loan interest rates.
- Total Income– More you earn better will be your loan interest rates. All that the lenders look for is someone with a good income scale as such people are more trustworthy when it comes to repayment.
- Down payment amount– Paying more amount as down payment at the initial stage of availing the loan stands for low rate of interest. More down payment means less amount to be repaid during the loan tenure.
- Age of the building-This is another influencing factor when it comes to deciding the amount of loan and the interest of repayment. If the house you are going to buy is under-construction or a well-furnished brand new one, then the rate of interest is generally low and vice versa.
- Purpose of the building-A home loan can be driven for two purposes- buying or constructing a commercial building or a residential building. If the house is meant for commercial purpose, the rate of interest on loan is generally high.
While these are some of the prime factors taken into concern when you are applying for home loan, other factors such as location, age of the loan and so; also influence the same. Go through everything carefully before you accept the loan and lament on a later date.