Factors Influencing your Mortgage Loan Interest Rates

Like most secured credits, a mortgage loan usually comes at low-interest rates compared to unsecured loans. Regardless, the rates applicable often tend to vary with borrowers despite a standard rate projected by the lender. It is mostly because mortgage loan interest rates are determined based on a few crucial factors, which influence the same. Here is a list of few such factors.

1. CIBIL score

In most cases, applicants who have a CIBIL score higher than 750 are more likely to avail a loan against property at a competitive rate. It projects them as a reliable applicant and further helps them secure a lower mortgage interest rates from the lending institution. Alternatively, applicants with a lower score may avail the same loan but at a higher rate.

2. Down payment

Higher down payments allow borrowers to negotiate for lower mortgage loan interest rates. Typically, the interest amount is computed on the outstanding dues. Thus, by making a higher down payment, the loan amount is reduced, which leads to both a shorter tenor and reduced interest burden.

3. Interest type 

Two types of interest rate can be levied on loans – fixed and floating. While the former remains constant throughout the loan tenor, the latter is subject to change as per market trends. Thus, depending on the type of interest chosen, rates can differ. 

Further, a borrower’s choice of tenor also affects interest accrual on the property loan availed, with extended tenors resulting in increased interest burden and vice versa.

Other than these, the loan amount also tends to influence the interest rates applicable on a housing loan and a loan against property.

Additional Read : Tips to Get the Best Mortgage Loan Interest Rates