As per a report,home loan enquiries have increased by 112% in July-August 2020, as compared to the same period the previous year. This is an especially impressive figure, considering the current financial crises in the country.
To help the masses,the Reserve Bank of India Has maintained the repo rate at 4% in its recent monetary policy review, in October 2020.Thus, this is good news for individuals who dream of owning a house but are deterred due to substantial home loan EMIs.
The tenure of the loan payment and interest rate are the two vital elements which determine an individual’s EMI. One can also use the home loan EMI calculator, which shows the exact amount needed to be paid without hassle.
Tips to reduce home loan EMIs
A home loan can be a step to purchasing the dream house, but an overburden of interest and EMI can induce severe financial stress on borrowers.Since EMIs rely directly on loan principals and interest rate, it is wiser to determine one’s capability to repay an advance before deciding these particulars.
EMI amount usually depends on aspects like home loan interest rate, tenure, etc.Strategies Will help to know how much home loan EMI one can afford and take measures to reduce the same.
Here are some tips to reduce EMI efficiently-
- Compare the financial institution
The primary task of a home loan applicant must be comparing different financial institutions regarding the interest rates they offer. Such details are available online for potential applicants to check.There are various portals which offer home loan EMI calculator, details on fees, charges, rate of interest to compare different lenders. Usually, the rate of interest is based on a borrower’s capability to repay and income, along with the repo rate at that time.
- Go with longer loan tenure
Going for a longer tenure is again smarter way to reduce home loan EMI, but it is important to note that overall interest cost will also increase. Therefore, an individual must opt for longer loan tenure when they have the ability to service the increased interest liabilities.
One should always calculate the tenure to determine the instalments needed to be covered. For this purpose, an individual can use a home loan instalment calculator offered by financial institutions.
- Bigger down payment
Home loan lenders are allowed to finance 80-90% of a property’s worth,leaving the remaining portion to be financed by the borrower from his/her own pockets. The simplest way to reduce EMI burden is to opt for limited credit and down pay a significant portion of a property’s cost.
With the reduction of this loan amount, the risk to lenders will decrease as well. To determine the amount for a down payment, one can take help of a home loan EMI calculator and calculate without hassle.
Existing home loan borrowers can utilise a refinancing facility to reduce interest liabilities, and, in turn, EMIs. However, such a move is only beneficial when undertaken at the right time.
One can also check how to reduce his/her EMIs with a home loan balance transfer to avoid accruing of unwanted debts. A smarter way is to look for lenders that offer loan transfer facilities with lower interest rates. Moreover, an individual can check home loan EMI calculator to determine one’s capability to repay the outstanding balance.
- Loan prepayment
Prepayment of the loan principal can reduce your interest liabilities significantly. Thus, one should prepay a portion of his/her dues whenever possible.
Some lenders provide pre-approved offers on home loans, loan against property and more. These offers expedite the loan approval process, which can be crucial in case of balance transfers. You can check your pre-approved offer by submitting just a few details.
Apart from following these tips, an individual must try to maintain an impressive credit history and CIBIL score to gain exclusive facilities on home loan from lenders. Thus, follow these tips wisely and choose the right financial institution to reduce the EMIs subsequently.