If you are planning a home loan, you are possibly making your biggest financial commitment. Struggling with home loan repayment; isn’t something new. However, there is nothing to panic about. A clear understanding of the factors that affect a home loan can give you a sense of relief. Interest rate and loan tenure are the two factors that have an effect on home loan. Generally, these factors compute the EMI that one is supposed to pay. However, both these factors can be worked upon. You can easily bring down the loan repayment amount every month. Besides, you may boost your monthly disposable income. This blog intends to give you some very useful tips that would help you in reducing the interest on your existing housing loan.
Home Loan Tips to Help You Breeze through the Repayment Process
1. Pay a Higher EMI if You Can
The process of paying additional EMI will save you from the interest burden. Besides, you can make your repayment earlier than the set tenure. You should also not be indecisive in revising the EMI payments every year. If you get a promotion or if there is a cash flow from any other source, you should consider increasing your EMI payment.
2. Opt For Balance Transfer
Well, many are uninformed about this concept. Moving to a bank that charges a lower interest rate is a very useful way how you can cut down your interest payments. A balance transfer allows you to switch over to another bank. You may transfer your outstanding amount to a lender offering a lower rate of interest. It is better to stay away from switching very often for minor interest rate differences. Before you finally decide to go for it; it is important that one compares and monitors the interest rates of different banks online. Banks generally offer profitable schemes, especially around the festival time. Keep a watchful eye!
3. Prepay Your Home Loan/Overdraft Facility
In this an individual needs to deposit some extra amount along with the EMI. This can be a good option as the amount is deposited in the home loan account of the applicant. This prepayment will surely save you from the interest burden. Besides, this will also drop off your loan tenure. The method has its advantage. This is primarily because these days’ banks do not charge any prepayment fee or impose any penalty on prepayments.
4. Go For Higher Down Payment
Higher down payment has many benefits. However, you need to think and plan for it carefully before you finally opt for the loan. Higher down payment will decrease the principal amount. Consequently, it would lead to lower interest. Most importantly, you pay less EMI. Besides, this increases your chances of loan approval in the initial stages. However, one should be careful and make a balanced and reasonable approach towards down payment, payment tenure, EMIs, and interest rates.
5. Manage Your Funds
An easy and simple way is to invest in options that give returns. This will give you good cash flow. Well, you use this extra amount to pre-pay your loan.
Wrapping up
There can be no denying the fact that repayment of home loans can be an area of concern for many. Following the tips mentioned in this blog can help you to handle them with ease.
Also view Types of Home Loan in India
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