Mortgage Loan Interest Rates: Current Trends in Mortgage Loan Interest Rates

Mortgage loans or loans against property are loans that property owners can avail of by pledging a residential or commercial property they own as security or collateral. Consequently, mortgage loan interest rates tend to be low, which is one of the most important reasons why so many homeowners these days consider availing themselves of a property loan, especially when in need of funds to take care of housing or business requirements.  

Let us discuss mortgage loan interest rates in detail and also share tips on how to secure a low-interest-rate mortgage loan. 

Loans against property or mortgage loans can be obtained at two different types of interest rates: fixed mortgage loan interest rates and floating interest rates. Floating mortgage loan interest rates vary based on external market conditions. For instance, a hike in external market rates causes the floating mortgage loan interest rates to go up. Similarly, an external benchmark rate cut causes the floating interest rates to go down. Fixed mortgage loan interest rates stay the same until a reset date. Floating interest rates tend to be lower than fixed interest rate loans and thus, most borrowers choose to go for floating mortgage loan interest rates. A third loan against property type is also available: hybrid. Here, the interest rates remain fixed for the few first years of the loan’s life but eventually change to the floating type. 

Securing a low mortgage loan interest rate is also quite easy if one reads about the factors that impact loans against property. To start with, if you want to be able to secure a low mortgage loan interest rate, you must maintain a high credit score. Lenders check every loan applicant’s CIBIL rating and extend the most profitable deals to individuals with a credit rating above 750. Further, doing proper research also works. 

Property loan applicants can also use a loan against property eligibility calculator to calculate the loan amount that they are eligible for and ask for a loan amount that their income, job profile and the quality of the pledged collateral make them eligible for. When a loan applicant applies for a loan amount that they can comfortably repay, lenders show a greater inclination to approve loans at better loan terms and conditions, including lower mortgage loan interest rates. All loan applicants must also use the property loan EMI calculator for loan repayment planning and budgeting. 

Yet another handy tip that helps loan borrowers secure a low mortgage loan interest rate is maintaining a low debt-to-income ratio or fixed-obligation-to-income ratio. If a significant portion of your total income is already going towards the repayment of debt, lenders will see you as a high-risk borrower and therefore, the chances are quite high that they will charge you a higher rate of interest. Individuals planning to apply for a mortgage loan are generally asked to maintain a debt-to-income ratio below 40%. Having a stable job and income is equally important. Better or lower interest rates are extended to individuals within the younger bracket as these individuals have longer working years and higher chances of gaining promotions than someone nearing retirement. If you fall within the higher age bracket, you can secure yourself a low mortgage loan interest rate by adding a young co-borrower. Opting for a low LTV ratio loan will help too.