Are you looking to purchase a new home or is it your first buy? Howsoever huge this dream of a house of your own is, it seems difficult to make it a real dream home if funds are inappropriate. If you too feel such a pain of lack of funds, do not adjust with a smaller home, think of applying for a Home Loan.
These days, most of the banks and NBFCs (Non-Banking Financial Companies) are offering Home Loans at an attractive rate of interest to the customers. The individuals who have good credit score can apply and get a Home Loan sanctioned with remarkable ease. If you have a good credit history, you can get a Home Loan at a lower rate of interest as compared to the other types of loans.
The Bank of Baroda, Bank of India, IDBI Bank and other banks and finance companies have announced packages and schemes to avail a Home Loan for people with a good credit score. The bank rewards good borrowers by providing various options with several benefits for the Home Loan, and the interest rates are set up depending upon your credit scores. If you are purchasing a house, then you can apply for the mortgage. The individual should have a credit score worth 600 or above to be eligible for getting a housing loan.
About credit score
The credit score is not only for getting a loan; it rather shows the overall financial picture. The credit score refers to the 3-digit numeric digit marked between 300 and 900 for an individual. The higher credit score corresponds to the higher creditworthiness of an individual. A person who comes with 750 score has paid previous debt on time without creating any problem for the lender. An individual who has higher credit score can get the home at a very lower rate of interest. Someone who has lower credit score especially those who have it less than 600, rarely get the payments approved.
These scores are set so anybody cannot play with the system as it has made the financial history of an individual a public information. There are various factors which are considered before assigning a credit score such as payment history, types of the credit utilised, credit history length, loan amounts, new credit and others. This helps to know the customer credit score before he is offered a New Home Loan for a Suitable Interest Rate.
Get the Home Loan at the lower interest
If anyone is having a credit score of more than 600, then they qualify for the Home Loan. A good credit score is the best thing for getting a New Home Loan at a Lower Interest Rate. You need not borrow money from your friends, family or somewhere else at a much higher interest if you maintain a good credit score. You can simply apply for it from the bank or NBFC.
The lender checks various factors before providing the Home Loan such as a reliable source of income, solid assets, low credit score among others. The individual needs to focus on boosting the credit report before the Home Loan is applied for. Before applying, you should check the minimum credit score from the lender.
How to apply for a Home Loan with the good credit score
Most of the banks and NBFCs have announced the reduction in the interest rates of Home Loan and the processing fees for a limited period. There are good deals available for the housing finance borrowers with good credit history and score. There are important factors to consider when choosing a Home Loan:
- Repayment period
One of the important factors to consider when applying for a Housing Loan is repayment period. The interest rate gets re-priced from time to time. This revision in interest rates is linked to the banks and financial companies for a term period ranging from 1, 6, or 12 months, however, certain banks do not offer them. Most of the banks are providing the 6 months reset period. The reset period varies from bank to bank; you can choose the bank based on your requirement.
- Credit profile
The credit profile is important in the banking industry. If the financial institute and bank charge the markup, then it is same for all home loan borrowers. But the bank and non-banking financial institutes can revise markup at any time, depending upon various factors such as aggressive intent, competition, to mention a few. The new markup is only applicable for the new Home Loan borrowers.
- Interest rate
The interest rate is another main factor to look out for when applying for a Home Loan. From April 2016, interest rates are either fixed or floating. The old borrowers and new borrowers pay the interest rate based on bank’s MCLR (marginal cost of funds based lending rate).
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