The mortgage loan is a suitable financial product that offers substantial funds to borrowers at an affordable interest rate. Usually, mortgage interest rates can differ according to a lender’s policy.
Potential borrowers must be aware of the factors that influence this rate significantly.
Factors that influence the mortgage loan rate of interest
CIBIL score
Applicants with a 750+ CIBIL score and remarkable credit history can easily negotiate with lenders for an affordable mortgage interest rate.
Location of a property
The location of a property significantly affects the mortgage loan interest rates. A property located in a prime spot with basic amenities has a higher value. Hence, lenders would levy a lower interest rate.
Borrower’s credit profile
To avail a loan against property, borrowers need to satisfy a set of eligibility requirements, as stipulated by their financial institutions. These requirements are mostly related to their age, income, city of residence, occupation, etc. Mortgage loan interest rates also depend on a few of these criteria.
For instance, salaried individuals who are close to retirement will need to service a higher interest rate, as compared to someone who has just begun earning.
Loan tenor
The repayment tenor can affect the interest rates significantly of LAP loan. Opting for a short tenor reduces the interest rate and processing charges. However, EMI is comparatively higher.
Other than these factors, the loan amount and property's market value also impact interest rates. Nevertheless, individuals must keep mortgage loan documents handy to justify their negotiation of the reduced interest rate.
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