Purchasing or undertaking to build a home is a huge investment in itself. On top of that, repaying a home loan is a lengthy process as it involves a high credit amount and a longer repayment tenure. Over time, home loan EMIs can weigh down your budget and turn into a financial burden. You must find ways to reduce the housing loan interest which will reduce your burden.
Given this scenario, borrowers can put a cap on the loan interest outgo and minimize the burden from these few tweaks.
- Increase EMI and retain tenure
If you’re availing a home loan, you’ll need to tweak your approach to mitigate the rising rates’ impact. By default, most lenders extend the repayment tenure instead of increasing the monthly installments. Now, even if you don’t feel the impact immediately, your interest burden will mount as the tenure rises. Although this is the preferred method of most lenders, you can negotiate in hiking the EMIs beyond what’s necessary to reduce the interest outgo over the entire tenure.
- Go for a home loan balance transfer
It’s possible that you might have taken a housing loan on a fixed rate of interest previously. However, if you come across an attractive home loan offer from a different lender – you can consider a home loan transfer. This way, you can benefit from a lower interest rate.
However, it’s advised to carry out a balance transfer in the early stages of loan repayment. As the interest component of your EMIs is substantially higher in the initial years of the tenure – carrying out a balance transfer during this phase is most beneficial.
Leading financial institutions and NBFCs offer attractive home loan interest rates. You can consider transferring your existing Home Loan to lenders like Bajaj Finserv with minimal documentation and quick processing. You can, therefore, enjoy their industry-first features given below.
- Flexible repayment tenure.
- No charge part-prepayment and foreclosure facilities.
- You can also avail a top-up loan of up to 50% on your existing sanctioned loan amount. You can thus fulfillyour urgent financial needs with this top-up loan
However, you can use a home loan EMI calculator to calculate your monthly payment amount and then make an informed decision whether it is feasible or not.
- Opt for a floating rate of interest
The home loan interest rate varies across lenders; hence, choose wisely between a fixed and a floating rate of interest. Housing loans which come with floating interest rate offer more affordability. So, when the lending rate drops, you can enjoy the benefits of the lower interest rate.
- Make part prepayments when possible
A great way to reduce the overall interest burden is to make part-prepayments towards the levied interest and lesser towards the principal. As the principal drops, so will the interest amount. Therefore, to make the most out of this facility, choose a lender who charges zero fees on multiple part prepayments.
- Revise your EMI pay-outs annually
Prominent lenders allow you to revise the EMIs every year. So, when you get a salary hike or your revenue increases consistently, you can raise your EMI amount. It is advisable for every 10% hike in income, increase the EMI payment by 5%.
Reworking of EMIs might feel like a small shuffle, but it reduces your house loan interest rate as the tenure ends. You can also avail home loan interest tax benefits under Section 24 and lower the burden of interest amount.