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Want To Reduce Your Monthly Home Loan EMI? Here’s How You Can

Everyone desires to avail of a home loan with the lowest home loan EMI. However, home loan EMIs are based upon various factors involving loan constituent, interest rate, repayment tenure etc. Having said this, regardless of whether you are an existing or new home loan seeker, you can lower your EMI repayments in different ways. You may contact your SBI home loan customer care or LIC Home Loan Customer Care in case of any query with any of the tips mentioned below to lower your monthly home loan EMI.

Go through to know the tips to reduce your home loan EMIs through effective and easy ways –

For new seekers –

Compare the rate of interest online – To lower your home loan interest, it is crucial to choose a loan from a bank lender providing the most competitive interest rate. You can simply do so by comparing the rate of interest from various lenders. Many portals mention the interest rate of home loans offered by distinct lenders. Browse them and select the lender who is providing the loan at a competitive interest rate. Doing so will assist you in lowering your EMI repayments to a massive extent.

Choose a high loan repayment tenure –

This is one of the effective tips to reduce your EMIs. Remember that home loan EMIs are proportional directly to the repayment tenure. The higher the repayment tenure, the lower your loan EMI. There are various home loan EMI calculators available online that can assist you in computing the EMI you require to pay on your loan. You can utilize any of the calculators to calculate the home loan EMI. However, remember that a high repayment tenure increases the interest constituent outgo. In simpler words, you often repay a higher interest constituent on a loan if you choose a higher loan repayment tenure.

Keep down payment proceeds big –

Remember that lenders do not fund 100 per cent of the property’s value. At the same time, it differs among lenders. Most release the funds worth 70 to 80 per cent of the home’s/property’s market value. You must pay the remaining from your own funds in the form of a down payment proceed. Ensure to keep the down payment proceed massive to lower the LTV (loan to value) ratio. This ratio is nothing but an indication of the property’s value proportion, which a lender can fund through a loan. Not just does it lower your EMI repayments, but it even expedites the loan approval procedure.

For existing borrowers –

Go for the housing loan refinance option –

In case you are an existing home loan seeker and are in your initial days of serving a home loan, you may go for the home loan balance transfer option to lower your EMIs. The procedure includes shifting to lenders providing better interest rates. However, remember that this move pays just if you are in the beginning stages of your home loan. It is better that you do not exercise this route if you are in your last 2 – 3 years of serving the home loan. This is because, by this time, you would have repaid a huge chunk of your home loan and moving on to a new home loan lender would mean fresh processing fees and other charges.

Home loan negotiation with the existing lender –

In case you have maintained a good relationship with the lender, you can simply negotiate the terms and conditions of the loan to pull it down. To foster a great relationship with your lender, ensure you repay your EMIs on time with zero default.

Prepay your loan –

Prepaying your home loan is the next important way to lower your Best Home Loan Interest Rates constituent. Prepaying brings your outstanding principal proceeds down, which consequently lowers your monthly EMI. If you have any bonuses or maturity proceeds from insurance or other investments, it is important to use a small portion of the same to prepay your home loan.

Listed here are a few ways how you can lower your EMI repayments –

Higher down payment –

When your loan gets approved, ensure to make a huge down payment so that your principal constituent is lowered. Your interest amount is computed based on the principal, so the lesser the principal, the lower the interest constituent and the smaller the EMI. It may appear tough to come up with a huge down payment. However, it will be worth it over the long term and lead to considerable savings in EMI amount. This is particularly the situation with a high repayment tenure loan such as a home loan, which includes EMI repayments over decades.

Choose a higher repayment tenure –

In case you have a higher repayment tenure, your EMI lowers proportionately because your principal and interest get divided over several months. But while the monthly outflow will be lesser, you will be repaying an EMI for a higher period with interest constituent for a longer time period. Thus, while your monthly burden may be lesser, you may end up repaying a higher amount over the whole loan period.

Make an early prepayment –

One of the ways to considerably lower your home loan EMI is to make prepayments. If you can afford this option of making a prepayment of your loan, it is better that you do it in the initial years or months of the repayment tenure so that your principal constituent falls, thereby saving you interest on your later payments.

Negotiate with the bank –

In case you are on good terms with your bank lender and have been disciplined with your timely repayments, then you can ask the lender for an interest rate reduction. If you hold a demonstrated excellent repayment history, your lender may be willing to reduce your rate of interest lowering your EMI burden.

Transfer loan to another lender –

In case you find a bank lender offering you better conditions on your home loan, it may be a great option to switch your lender. However, it is essential to compute the costs involved in prepaying your home loan with your prevailing lender. Ensure that the cost incurred is higher than the saving that you get with your new bank lender.

Ending note –

With proper planning, you may not just lower your EMIs but even make sure that you repay them by the due date without fail. This will keep your score healthy and make you an eligible candidate for procuring loans in future at better terms & conditions.

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