Do you want to reduce your existing housing loan rates? Read on to know five easy ways to lessen your Home Loan interest rates!
Opting for a housing loan may give you’re the required money to fund your dream home, but it is also governed by the Home Loan interest rate. Yes, Home Loan rates could have a direct impact on your cost of the loan and monthly outflow. Hence, even a small discount on Home Loan interest rates by the lender can affect your EMIs payments.
In the same context, let’s provide you some easy ways to reduce your Home Loan interest rates so that you pay a lower EMI and could manage the cost accordingly.
1. Opt for a Shorter Loan Tenor
Opting for a longer Home Loan tenor may let you pay lower EMIs, it adds substantially to the overall interest outflow. Thus, go for a shorter loan tenor so that the principal is repaid in lesser time. Although opting for a shorter loan tenor may let you avail lower interest rates, you may have to pay higher EMIs, and you should check your affordability before opting for it.
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2. Make Some Prepayments
Another prudent way to save on the Home Loan rates is to pay one or two extra Home Loan EMI each year. Opting for a housing loan prepayment may help you reduce the principal amount and interest rates, overall. Thus, if you have some surplus money, make it a point to prepay the Home Loan and reduce the interest rates.
3. Increase the EMI Annually
You may be getting salary appraisals each year, and when you get that, you can increase the Home Loan EMIs by paying 5-10% extra. Like this, repayment of the principal faster helps in reducing the Home Loan interest rates.
4. Go for a Home Loan Balance Transfer Facility
Even after implementing above tips if you are unable to lessen the Home Loan rates, you should opt for a Home Loan Balance Transfer facility. A Home Loan balance transfer facility is available with leading online lenders and non-banking finance companies (NBFCs). In this facility, you can easily transfer or switch your existing Home Loan account from your existing lender to a new lender. Yes, if you see that your existing housing loan lender is unable to provide you better services or if you are paying a higher interest rate, you can transfer the loan account to a new lender.
A new lender offering your better services along with lower interest rates will help you reduce it. Some lenders also offer you a top-up loan along with a Home Loan balance transfer facility to cover your other needs at a lower rate and longer tenor. You may get around Rs.50 lakh as a top-up loan along with 3-EMI holiday. Your existing lender will also charge you some processing fee for transferring your Home Loan account. Hence, you should always ensure to see if the profits received on a loan transfer is more or less than the processing charges.
5. Provide a Higher Down Payment
When you make a higher down payment while acquiring a Home Loan, it can help you reduce the principal figure. As a result, a lower principal amount means paying lower interest and EMI pay-outs. Although some banks and NBFCs may offer you to cover almost all of your desired Home Loan amount, ensure to pay 20% as down payment. When you have already paid 20%, you only need to care for the 80% which means you will need to repay substantially lower EMIs. Needless to say, your interest rates will also reduce when you make a higher down payment – the higher, the better.
The Bottom Line
Now that you are aware of the smart ways to reduce Home Loan rates, it would be advisable to implement the same and save money! You can also use a Home Loan EMI calculator to know how much EMI you are currently paying along with the interest rates. It will help stay aware of what you are paying and the cost involved. Happy Home Loan management!
