Credit Wisdom

Taking a loan in the name of a senior citizen in the family would help you get a home loan at a reduced rate of interest. Most reputed financial institutions like LIC housing loan or other offer a 0.25%-0.5% reduction on the existing home loan rates. All you have to do is to ensure that the senior citizen meets the eligibility criteria for getting the adequate amount of home loan as required by the bank or NBFC.

Similar to senior citizens, most banks offer a reduced rate of interest for home loans taken by females as well. This means that if you take the home loan against your wife or mother’s name, you would get good benefits on the interest rates of your LIC home loan or loan from any other bank.

Collateral securities like National Savings Certificates or Kisan Vikas Patra or insurance policies could help in reducing the rate of interest on your home loan. These would serve as a guarantee to the bank that in case you become a defaulter and not able to pay back the loan, their money would still get recovered. As long as banks see their money going into safe hands, they do not increase the rate of interest unnecessarily.

Your credit rating scores or the CIBIL scores could play a major role in deciding the rate of interest on your home loan. If you have a better credit score, banks would recognize you as a worthy creditor and they would offer a lower interest rate on the home loan. Be it LIC housing loan or any other bank, a healthy credit score proves to be very beneficial in getting the best home loan deal.

Apart from the rate of interest, the processing fees of home loans also vary for every bank. There is no point taking a loan from a bank that offers an incredibly low interest rate, but charges an exorbitantly high processing fee. To avoid this, be very candid while getting into a discussion with the banking agents and ask about processing fees and foreclosure formalities in details. That will ensure that you get the best and low interest home loan to build the dream house of yours.