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 Grossiste Air Max Rose , 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. Yes, one of the most important factors that determine the interest rate you receive is your credit score. This score is arrived at after considering your previous credit history and spending habits. Think of it as a credit report card that is calculated on the basis of your previous loans and repayments history Grossiste Air Max Bleu , how much you use your credit card and how punctually you’ve paid the bills for the same and various other spending habits. The higher your credit score, the lower the house loan interest rate you can expect.
The second aspect is your economic situation and your age. Basically how you stand financially and your age also affect the house loan interest rate you receive. Say for example, you’re young, a first jobber Grossiste Air Max Rouge , you don’t have much in terms of savings, in that case you’re not so financially sound and lenders generally consider you as risk, so the interest rate will be marginally higher. But say for example, you’re middle aged Grossiste Air Max Blanche , have a steady job and your savings are good and getting better, making you less of a risk in the eyes of the lender and thus giving you the comfort of a lower home loan interest rate. But say you take out a home at a later age, maybe as you approach your retirement, then you’re either going to run out of an income source or receive a pension that’s fixed Grossiste Air Max Noir , in that case you are a risk to the lender and hence the home loan interest rate will tend to be higher. In case you have your own business, then the longer your business has been running, the better your income tax statements and the higher your scope for growth, the lower your interest rate. Further Grossiste Chaussure Air Max , if you have a partner, or parents to supplement your income with an income of their own, then you’re less of a risk to the lender and automatically your interest rate drops.
The type of home you’re buying. You’re probably wondering what we mean when we say type of home. Well, single-family homes purchased as a primary residence pose the lowest risk of defaulting. Whereas Grossiste Air Max Pas Cher , homes purchased as vacation or second homes invite a higher interest rate. Financial institutes often levy higher interest rates for ‘riskier’ properties.
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.
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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Posted On : Nov-11-2011 | seen (70) times | Article Word Count : 418 |
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06.12.2019 03:00
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