Home loan EMI puts stress on your monthly budget if you do not have the proper plan to handle it. Keep in your mind that home loan amount, loan tenure, and interest rate are the main factors that affect the home loan EMI.
If you do not have proper planning, then you may end up paying more against your home loan amount. If you want to take a home loan, then you should take care of the interest rate. In this article, you will learn the best tips that will help you to reduce your home loan interest rate.
1. Go for a short tenure.
As we tell you already, loan tenure is an important factor that affects the interest rate of your home loan. The long tenure of 25-30 years reduces the monthly installment amount. The short loan tenure of 10-15 years will reduce the interest payable. You can easily determine how the interest rate is reduced with short tenure by using a home loan EMI calculator.
2. Prepayments are good options.
Lenders do not charge loan foreclosure or prepayment charges. So, if you signed up for a home loan, you must try to make a prepayment with time.
Making prepayments frequently bring down the principal amount and reduce the total interest rate. Keep in your mind that lenders may charge the same percentage on fixed-rate loan prepayments.
3. Compare the online interest rate.
It is suggested to borrowers first research various home loan offers and compare them to choose the best one. Various third-party sites give you a clear picture of the charges and rates levied by different lenders.
So, if you compare the home loan interest rate levied by different lenders, you will surely get the best loan product.
4. A home loan balance transfer is a good alternative.
Balance transfer comes into a vital role when you start making prepayments against the loan amount. If you observe that the interest rate charged on a home loan by your current lender is higher, you can easily transfer your remaining principal amount to another lender at a low-interest rate.
However, the balance transfer works like a last resort. Any missed payments on home loans invite great penalties. So, you should keep your home loan balance transfer if no other options are left.
5. Pay more down payments.
Many banks are financing 75% to 90% of your total property value. You should contribute 10-25% of the remaining cost property. Instead, to pay the least, it is suggested to contribute more from your pocket in the form of down payments.
The higher amount against the loan you pay in starting, the lower the amount of the loan is. It will affect the interest rate on your home loan directly.
Conclusion
Before taking out a home loan, consider everything mentioned above. You may reduce the interest rate on house loans using all the tips. Ensure to read all terms and conditions and know the fees and charges possessed by a lender before taking a home loan from them.