A home loan is the security for the repayment of a loan, such as that incurred on the purchase of a house, whereas a mortgage refers to a loan secured by real property. In other words it is a loan on a property which has been taken by the lender as security against the loan. Home loan interest rate is the finance charge for availing the authority to access future capital. Sometimes the interest rate becomes one of the very important factors that you should think about before applying for any loan.
You can get a lower home loan interest rate if you constantly keep an eye on various updates from banks. To stay competitive in the market and expand their business, banks often try to offer the lowest interest rate and hence get you the best prices. If you go back to less than a decade ago, you will find that banks used to enjoy higher leverage over their customers because most of the customers lacked what we call bargaining power; This is because there was less competition. Gradually with the passage of time many banks came into existence who started offering low home loan interest rate and counteracted the earlier situation and now the customers have started enjoying more power.
In some cases, the credit card report also acts as an important factor in determining your home loan interest rate. A credit card report contains information about the types of credit you have availed, bankruptcies, bill payment history and court history at each stage of your life. Not only this, every time a creditor entry is also noted on your credit card report.
The various reasons for which a creditor would use your credit report are for home loan, personal loan or credit card etc. One thing you should keep in mind that a creditor will be allowed to access your credit report only with permission. This factor is important because what happens is, if too many lenders have accessed your credit report in a short period of time, either the lenders will reject your loan applications or you may get offered a higher interest rate.
The type of accommodation determines the home loan interest rate because if the loan is for a house where you will live full time, part time or on rent. In general, those who stay in their homes for longer periods enjoy the best rates. Like when you buy something in bulk, you pay less; The same thing happens if you borrow a large amount. This can help you land up with a concessional interest rate.
Sometimes the business cost also decides these interest rates. As different states have different business costs due to their respective rules and regulations. They pass on or add on this cost to lenders in the form of interest rates. Therefore, fluctuating cost means fluctuating interest rates.