Not getting the best rate on home loan? These could be the possible reasons
New Delhi: Home loan rates in India have now fallen to historic lows with lenders offering loans starting from 6.65%. While private sector lender Kotak Mahindra Bank charges the lowest rate on home loan starting from 6.65%, LIC Housing Finance has recently reduced its home loan interest rates to as low as 6.66%. Another private sector lender Punjab & Sind Bank also charges 6.65% on home loans. Meanwhile, home loans from State Bank of India, the country’s biggest lender, start from 6.70%.
However, many borrowers do not get these low rates on home loans and still paying more than 7% on home loans. These could be the possible reasons why borrowers do not get the best rates on home loans.
1. Typically lenders offer their best rate to individuals having the highest credit score. But the criteria vary from lender to lender. While some lenders give their best rate to people having a Cibil score of more than 750, other lenders give it to borrowers having a Cibil score of more than 700. For borrowers having a credit score of less than 700, lenders charge a risk premium on the lowest rate. If you do not have the above-required credit score, you may not get the best rate on home loan.
2. Most of the banks offer their best rate on home loans to salaried-women borrowers for home loans up to a value of Rs 50 lakh. For men, they charge an additional 5-10 basis points over the cheapest rates they offer. One basis point is one-hundredth of a percentage point.
3. Some banks offer their best rate on home loans up to Rs 30 lakh. So if you are looking for a home loan of more than Rs 30 lakh then you may not get the best rate.
4. Most banks have their own list of preferred employers. If your employer is not on the list, then you may not get the best rate of that lender. The lowest rates, typically, are meant for salaried customers. For entrepreneurs, a lender may have different rates.
5. Other than gender, work profile of the borrower and Cibil score a lender may look for other criteria to offer the best rate on home loans those are the borrower’s age and education qualification and the age of the property. So if you are in your mid-forties, and buying an old property, you may not get the best rate.