Here Is What You Can Do To Lower Your Home Loan EMI
Home loans are one of the most commonly availed secured loans. They generally come with longer tenors of 20 years or more and are therefore termed as long-term advances. Secured loans are offered at lower interest rates compared to unsecured ones.
Borrowers can easily avail the best rates if they meet all the eligibility and document requirements of the lenders and possess high credit scores. Lower rates translates into lower EMIs, considering the tenor stays the same.
There are numerous ways in which you can avail the lowest home loan interest rates from loan providers in India.
Ways to Lower the Home Loan EMIs
Following is your guide to getting a better home loan interest rate:
1. Extending the Tenor
Extension of the repayment tenor can reduce the financial burden and reduce the EMIs easily. However, the extended tenor may increase the overall cost of loan.
A lot of people do not realise that if the tenor is increased based on the lowest EMIs, they ultimately end up paying more interest throughout the outstretched tenor. Increasing the tenor is therefore a decision primarily based on current financial status.
2. CIBIL Score
Depending on the CIBIL score, the home loan interest may change even if all the other factors are the same. The lowest home loan interest rate is available to borrowers who have credit scores above 750. If you want to avail better home loan interest rates, you will need to monitor the CIBIL score properly and make improvements if necessary.
The CIBIL score can be improved as follows:
1. Clear existing debts.
2. Paying credit card balances.
3. Rectifying errors on the credit reports.
With the increase in the CIBIL score, the chances of better interest rates increase considerably.
3. Higher Down Payment
Making a large down payment can help you opt for a lower principal amount when you apply for a home loan. Lenders set the home loan interest depending on the principal amount borrowed.
The smaller the principal amount, the lower is the home loan interest rate. This results in smaller EMIs. As a general rule, an individual will need to pay at least 20% of the purchase price of the home to stand a chance at getting the lowest home loan interest rates.
There is also the possibility of negotiate with the lender to lower theinterest rate for a home loan. But, for this to happen, the individual needs to be acquainted with the financial institution which creates a bond of trust. In case you are making the loan repayments on time, the lender may consider offering a better interest rate.
5. Increase the Amount of yearly EMIs
Availing the loans on floating rates of interest gives an individual the option to choose increased EMIs. This can be considered forecasting future growth in annual income. You can choose the option of selecting a growth of 5% in the EMIs every year in respect to the increase of the salary. It can help in paying off the outstanding faster compared to the normal terms and EMI system.
There are a lot of financial institutions which offer attractive facilities along with their home loans. In case you are looking to buy a house for your family and are short on funds, there is nothing to worry about. Opt for external financing by fulfilling easy-to-meet eligibility criteria and providing the minimum documents required for a home loan.
Bajaj Finserv provides several such loan options at affordable rates of interest and flexible repayment tenors. They also brings with them pre-approved offers on home loans as well as on unsecured credits such as business loans, personal loans and other financial products. Availing finances are made simpler by these offers, and they also save time.
Before applying for the loan, you should calculate the monthly EMIs. Hope now you know
how to reduce home loan interest. This is a must as it will tell you how minimum you need to pay every month. Based on the amount, you may try for a reduction in the interest rates.
Also, you can apply for a home loan balance transfer at lower interest rates offered by other financial lenders. You should opt for the plan which suits you the best.