If you are willing to apply for a home loan to finance a dream home, then you should know that repaying the same can be a lengthy process. You may get a home loan tenor of up to 20 years from lenders. Hence, if you don’t work it out properly, the home loan EMIs can affect your monthly outlay for a long time.
Hence, there are some proven ways that you can implement to decrease the latest home loan interest rate.
In the same context, opting for a lender offering the lowest interest rate in the market at the MCLR rates can help you. Other than these discussed points, you can also follow some tips to reduce the home loan interest burden.
1. Opt for a Small Tenor
Opting for a shorter tenor will mean paying a higher EMI. But, a longer tenor means that you will need to pay more interest. Hence, you can use a loan EMI calculator to choose the right tenor at the time of applying for a housing loan. It’s understandable that you may pay a higher EMI during the initial loan tenor. But, you would be able to manage maximized EMIs as you will earn more with time.
2. Go for Frequent Prepayments
From time to time, you can also make prepayments towards the outstanding loan amount whenever you receive a bonus, salary increment, and other part-time income. This way, you can bring down the outstanding loan amount as well as the interest rate and pay lower EMIs. It also means that your loan account may be closed earlier than the scheduled tenor. Most leading lenders don’t charge any amount for making home loan prepayments and foreclosing it early.
3. Revise the Emi Amounts Annually
Did you know that some lenders let you revise your EMIs every year? Yes, that’s true! Thus, when you receive a pay raise or see a regular boost in your overall income, then you may ask the lending institutes to up the home loan EMI amount. You can increase your EMI amount by 5% when you receive a 10% raise. A small change in the EMI amount per year may not look promising in the beginning. But, every increase will lessen the loan tenor and thus reduce the interest as well.
4. Go for a Home Loan Balance Transfer
If the latest home loan interest rate for your loan account is on a higher side than what other lenders in the market are offering, you can think about refinancing it. A home loan balance transfer from a leading online lender may help you switch to a lower rate. As a result, it will help you reduce the interest as well as pay smaller EMIs. While availing the home loan transfer facility, you can also get a top-up loan. It is offered at a lower rate of interest along with a tenor almost as long as your home loan. You can use the loan amount to fund many of your needs without restrictions. Many creditors can let you avail up to Rs.1.5 crore as per your eligibility.
You can now reduce the home loan interest rates and pay smaller EMIs by implementing the discussed tips.