Finding the best deal for mortgage loans is not an easy task. An extensive comparison between various lenders and knowledge on the subject-matter is an unavoidable requirement, lest you select a terrible offer.
Identifying which factors play a significant role in determining the cost of borrowing the loan amount is extremely important.
For making it understandable, we have jotted down seven crucial factors that hold the ability to impact your Mortgage Loan.
1. Rejection of a Previous Loan Application
The first pointer, applicable for all loan types is the impact of your previous loan applications. If you had applied for any loan some time ago and the lender refused to give you the amount irrespective of the reason, then a negative impression is left upon your new lender.
Hence, one must always aim at decreasing their chances of being listed as a riskier borrower.
2. Credit Scores
The next thing you have to keep in mind is to maintain a strong credit history for attaining excellent credit scores. Remember, they have the power to change your fate. Untimely payments, not replying to the lender during the repayment tenure, too many loans availed, etc. can lead to you holding a degraded credit score. A good credit score can do wonders and might even put you at the top of the list of all the borrowers!
3. Location of Your Home
For determining property loan interest rates, the location of your property is another crucial factor. It will affect the interest rates charged by the lender. Hence, always discuss with the lenders before-hand and make all the terms clear.
4. Loan Amount
The higher the loan amount you seek to borrow, the more will the lender face the risk of funding you.
5. Repayment Tenure
Another critical factor that can influence the Mortgage loan interest rates is the loan tenure. If you’re rooting for a shorter term, the interest rates might be low, but the burden on the monthly payments will increase terribly. On the other hand, in more extended repayment periods, the interest rates are high, but EMIs are lower.
Therefore, analyze which situation you’ll be more comfortable and then decide.
6. Type of Interest Rates
There are two main categories of interest rates:
● Fixed: the rate of interest is constant for the entire repayment tenure.
● Adjustable: the rate of interest fluctuates with the benchmark or referral rates. It is perfect for customers who are willing to take a risk.
7. Down Payments
If you’re able to make a considerable amount of down payment, you won’t have to suffer higher rates of interest while availing a loan against property. Most lenders put a condition of insuring your loan if you’re unable to make a down payment of at least 20%. Buying an insurance cover can increase the overall cost of taking a loan, hence making sufficient down payments is preferable.
Researching and having an idea of all the factors that can influence your mortgage loans now or later on is an inevitable task. Unless you know everything about the concept of such loans, it is impossible to keep up with all the rules and regulations of the lender or at the least, avoid massive losses whilst repaying the loan. Therefore, do your homework well!