How Does your Property’s Status affect your Home Loan Interest Rateby Tushar Singh Investment Banker
People frequently avail of home loans as they provide them with the capital needed to build a house or repair one. There are a few different factors that affect the interest of the home loan. The status of your property is one of the main things that the lender checks while granting you a home loan.
Here, you can understand the relation of the of your property along with some other factors that also affect the home loan interest rates.
Property’s status and home loan interest rate
Here, the details regarding the property’s status are mentioned in brief. You can also understand how interest rates changes in every situation.
Location of your house
The location of your house plays a vital role in determining the home loan interest percentage. A house in a proper location with enriched amenities will have a lower interest rate. The lender will judge the amenities by checking the connectivity of your house and the distance of your house location from markets, hospitals and other places like the bank, post office, and police station. Excellent amenities lead to easier resale; thus, the lender organizations can offer you a home loan with lower interests.
Expect a lender organization to charge more interest rates on your home loan if the location of your house is remote having poor amenities.
Condition of your house
If you take a home loan for constructing a new house or buying a new house, your home loan interest will be low. However, if you take it for repairing the house, the interest rate will depend upon the age and the overall condition of the property. Home loan interests against older properties will be more as the lender cannot get a good resale value.
The lender organization is always at more risk while giving you a home loan as it is an unsecured loan. But, they can claim the ownership of the property if you provide the EMIs. They can auction your property and earn the capital easily.
Other factors affecting the home loan interest rate
Apart from the status of the property, there are other factors on which the home loan interest depends. Here, such factors are mentioned in a nutshell:
Loan capital: If the loan capital is huge, you can expect the interest of the loan to be more. However, the bank can check your credit and financial history and the MCLR before granting a loan capital.
Monthly Income: The borrower’s monthly income plays a determining role when it comes to taking a home loan. If your monthly income is stable, you can get a home loan with a decent loan capital with a reasonable interest rate.
As a home loan borrower, you must be aware of the fact that a home loan is unsecured. The lender organization experiences a risk while offering a home loan. For this reason, the interest rates of the home loan always remain high compared to the secured loan. However, the borrower can get a long tenure of 15 to 20 years to repay it. The only thing a home loan borrower has to remember is never to miss a repayment for more than three consecutive months.
Created on Dec 26th 2019 00:52. Viewed 147 times.