{"id":701,"date":"2023-07-28T19:10:07","date_gmt":"2023-07-28T11:10:07","guid":{"rendered":"http:\/\/www.imoney.my\/?p=701"},"modified":"2023-07-28T20:08:16","modified_gmt":"2023-07-28T12:08:16","slug":"5-things-that-affect-your-home-loan-interest-rate","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/5-things-that-affect-your-home-loan-interest-rate","title":{"rendered":"5 Things That Affect Your Home Loan Interest Rate"},"content":{"rendered":"

There are a number of factors that could influence the interest rate on your home loan.<\/p>\n

Some are external factors (e.g. the state of the economy) which are beyond your control. Others (e.g. your credit score) you may have some influence over.<\/p>\n

Let\u2019s take a quick look at some of these factors:<\/p>\n

<\/span>Base Lending Rate (BLR)<\/strong><\/span><\/h2>\n

The BLR<\/a> is a reference interest rate used by banks to decide how much to charge for various products they offer. It is a rate that takes into account banks\u2019 cost of operations, and is typically similar among the major banks.<\/p>\n

In Malaysia, home loans are normally quoted as a percentage above or below the BLR. If the BLR increases or decreases by a certain amount, the interest rates charged on floating rate home loans also increase or decrease by the same amount.<\/p>\n

<\/span>Your personal credit profile or credit score<\/strong><\/span><\/h2>\n

Your personal credit profile or credit score is more important than you think. It can often decide whether you will qualify for a home loan or not. This score also directly affects the amount and interest rate the bank is prepared to lend to you.<\/p>\n

Banks normally look at two things: your credit worthiness, and the level of your income. To enjoy lower home loan rates, you need to have both a good credit profile and a decent income.<\/p>\n

Find your ideal home loan from our list of recommended home loan products<\/a>.<\/div><\/div>\n

<\/span>Your home loan terms<\/strong><\/span><\/h2>\n

The interest rate on your home loan may vary depending on the terms of your loan.<\/p>\n

Home loan amount<\/strong> \u2013 Generally the more you borrow, the more bargaining power you have, and the lower the interest rate on your home loan.<\/p>\n

Home loan period<\/strong> \u2013 Loans with a shorter term are generally more expensive (i.e. higher interest rates) than loans with a longer term. While it may seem like a good strategy to extend the term of your loan, you should be aware that the actual amount of interest you pay is generally less on a loan with a shorter term.<\/p>\n

Home loan insurance<\/strong> \u2013 Some banks offer a discount on your interest rate if you apply for a mortgage insurance along with your loan. These insurances (e.g. Mortgage Reducing Term Assurance or MRTA) help cover your outstanding loan amount in the event of death or permanent disability, thus reducing your risk as a borrower in the eyes of banks.<\/p>\n

<\/span>Location of your home<\/strong><\/span><\/h2>\n

The interest rate on your home loan can vary depending on where your property is physically located. The rationale here is that not all locations provide the same level of risk to the bank.<\/p>\n

An area that is growing and experiencing property price increase will be less risky to a bank. As the price of property increases, borrowers in these locations effectively become \u201cricher\u201d and will less likely default on their loans.<\/p>\n

<\/span>Are you a profitable customer?<\/strong><\/span><\/h2>\n

Like all businesses, banks are profit-driven. If you have many products (e.g. current accounts, credit cards, car loans) from the same bank, chances are, you will receive a much better offer for your home loan from that same bank (versus other banks).<\/p>\n

Interested in knowing which bank offers the best housing loan interest rate? Compare all housing loans and find the best one using the home loan calculator<\/a>.<\/h4>\n
This article was first published in July 2014 and has been updated for freshness, accuracy and comprehensiveness.<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"

The interest rate on your home loan can vary by a few hundred ringgit to more than RM1000 depending on these factors!<\/p>\n","protected":false},"author":1,"featured_media":57398,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[239,226,218,21],"tags":[833,766,826,365],"class_list":["post-701","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home-loan","category-home-loan-refinancing","category-money-management","category-properties","tag-blr","tag-money-management","tag-opr","tag-property"],"acf":[],"yoast_head":"\n5 Things That Affect Your Home Loan Interest Rate<\/title>\n<meta name=\"description\" content=\"Housing loan interest rates can vary depending on a number of factors. 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