A home loan is most likely the largest debt a person will ever take out. It is a secured loan in which your property is mortgaged with the bank and you must pay the bank the entire loan amount in EMIs in order to finalise the transfer of ownership of your property. Due to the hefty loan amount, borrowers frequently want to lower their home loan interest rates and the EMIs. If you obtain a home loan without planning your interest rates and EMIs, it might cause you problems because it is a loan with a longer term and large EMIs, and you may struggle to manage your expenses and savings.
Therefore, if you are planning to obtain a home loan or having trouble managing your existing home loan EMIs, here are some of the tips to help you reduce your home loan interest rates-
Home Loan Balance Transfer
If you already have a house loan with a higher interest rate, you may be eligible for a home loan balance transfer, which allows you to move your loan to a lender with a lower interest rate. This could save you money in the long run by preventing you from paying higher interest rates and depleting your savings. Because most house loans are on a floating rate basis and there is no penalty for refinancing, the sole cost will be the fee imposed by the new lender. A balance transfer may help you reduce your EMI if you get a good rate.
Consider floating interest rates over fixed interest rates
Taking out a house loan with variable interest rates is advantageous since you will pay interest rates based on market interest rates. In the case of fixed interest rates, however, the borrower is more likely to pay the fixed interest rate throughout the loan term, regardless of market developments. Due to historically low interest rates, it may make sense for a fixed-rate borrower to transfer to a floating-rate loan, either with the same lender or with a different lender, as they may find the switch profitable despite paying a penalty for foreclosing a fixed-rate loan.
Opt for longer tenure for shorter EMIs
Shorter EMIs are possible if you choose a longer term. Hence, if you’re having trouble paying your instalments or managing your expenses, you can ask for a tenure extension to lower your EMIs even further.
Regular Prepayment of loan
You can partially prepay the loan if you have enough money to pay in the existing loan amount to minimise the remaining debt and interest costs. The outstanding loan balance is reduced when a portion of the loan is paid off. It also reduces the interest and shortens the loan term, allowing you to repay the debt faster. You can also ask the lender to reduce the EMIs if you do not want the loan term to be shorter.
Complete research of the market for obtaining better deals
You should constantly look into the market and hunt for better offers before applying for a home loan. Because the criteria for house loan eligibility change from lender to lender, you must search for and compare the best offer for yourself based on your eligibility. If your CIBIL score is higher, you have a better chance of getting a house loan with the lowest possible interest rates. You can also check for festive discounts, since lenders often provide tempting loan deals over the festive season.
Increment in your EMI
If you’ve gotten a raise in your career or your income has grown, it’s a good idea to increase your EMIs to match your monthly budget. This will assist you in reducing the loan term and, as a result, the interest rate.
The Bottom Line
Home loans are the longest loans due to which they require extensive planning and research. You need to search and look for the best lenders offering the best home loan interest rates. It is crucial to plan and decide your home loan EMIs as it affects your monthly budget for a long time.