5 factors that affect your home loan interest rate.
Posted by Anurag Mishra on July 14th, 2017
So you’re in the market to acquire a new home, the one of your dreams. And of course with the soaring property rates and rising inflation you chose to secure this dream property through the help of a home loan. Indeed it is a wise decision, but among the many factors you need to consider before taking a home loan, the interest rate is one of the most important aspects. And though most house loan interest rates start ona fixed percentage, on the basis of some influencing factors, this interest rate may go up or even fall a few points based on the following factors.
The first and most important factor, your credit scores.
The second aspect is your economic situation and your age.
The type of home you’re buying.
The loan tenure also affects your home loan interest rates.
Yes, the tenure of the loan also plays a role in deciding the rate of interest you are charged. Short tenures mean larger installments and quick retrieval times for the financial institute lending you the money. Hence shorter tenures invite lesser interest rates. This norm follows an ascending order, meaning the longer the tenure of the loan, the higher the risk to the lender resulting in higher interest rates.
Lastly, the amount borrowed.
Probably one of the biggest catalysts to your interest rate is the amount you’re borrowing. Again this boils down to the risk incurred by the lender. Larger amounts pose a higher risk to the financial institute lending you the money and so these amounts also bring with them a higher rate of interest.
So there you have it, 5 major reasons that can affect your house loan interest rate. Albeit, these are not the only factors that cause a rise or fall in your interest rate but they’re some of the most dominant reasons.
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About the AuthorAnurag Mishra
Joined: December 13th, 2016
Articles Posted: 108
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