While acquiring a home loan, two factors that mainly determine the amount payable as EMI are home loan interest rate and loan tenor. Apart from these factors, there are numerous ways to reduce home loan EMI payments. Some of them are mentioned below.
Bigger down payment
A down payment is an initial advance payment borne by borrowers from their own pockets while purchasing a house on credit. For home loans, generally, an amount equal to around 10% to 25% of the loan amount is needed to be paid as downpayment. The remaining home loan amount is serviced through monthly instalments. Individuals can also choose to hike the downpayment amount to lower loan principal, and, in turn, liabilities.
Choosing longer tenor
Usually, non-banking financial institutions prefer borrowers who opt for a short repayment tenor. However, one can choose to extend the loan tenor, which would reduce EMIs and ease repayment. To determine the exact interest amount, which is to be paid, one can take the help of the home loan EMI calculator.
Prepayments
Prepaying your home loan refers to repaying the loan either partially or in full before the official due date. Several financial institutions offer this facility. Previously, a considerable amount of fees was charged for loan prepayments. Nowadays, however, it is easy for borrowers to prepay a significant chunk of their home loan before the defined due date as the majority of the financial institutions don’t charge prepayment fees.
Considering a different lender
Though one might have taken a home loan from a lender offering a high home loan interest rate, there is an option to change the financial institution mid-loan. This usually happens when one finds a lender offering a lower interest rate. This particular process is known as refinancing or balance transfer.
However, before opting for a different lender, one can take the help of the home loan EMI calculator to precisely get an idea as to how much the EMIs can decrease.
Negotiating service terms
An existing home loan borrower can negotiate the service terms of this credit with his/her existing lender. This can let the borrower procure a low rate of interest on the loan amount. Maintaining good terms with the existing home loan borrower can let an individual go on for such a negotiation.
If you have maintained an impressive repayment history with the chosen lender, the chances of acquiring housing loans at favourable rates are higher. However, if a borrower’s credit score is lower than desirable, most HFCs would avoid lowering rates.
Home loan borrowers should be responsible for their repayments, irrespective of how they opt for reducing EMI payments. In that way, they would become eligible to enjoy additional benefits.
For instance, financial institutions provide pre-approved offers, which help in simplifying and accelerating this lending process. These offers are provided on various financial products like home loans, loan against property and more. One can check the pre-approved offer by providing a few details, such as one’s name and contact number.
Hence, if a borrower wants to reduce EMIs even after choosing their desired home loan interest rate and tenor, doing so is simple by following the tips mentioned above.
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