Everyone knows that paying off a home loan can be one of the most taxing commitments in our lives. That is because customers tend to opt for 15-20 years to pay off the entire loan. Imagine putting aside a certain percentage of your income every month without fail for such a lengthy tenure! As such, if you fail to plan, a high home loan EMI can negatively impact your financial well-being and mental health.
Hence, try to reduce home loan interest rates before and after taking a home loan following some easy tips. That helps you pay it off quickly and more efficiently without feeling overwhelmed ever. The most obvious thing you can do is sign up with the right lending institution that offers the most favourable terms and competitive interest rates.
Here are 4 easy tips in which you can reduce your home loan interest that our experts at PNB Housing recommend:
1. Go for a Mindful Loan Tenure
When deciding the home loan tenure, make sure you give it a thought before deciding on the final loan term. There can be two approaches to determining the home loan tenure, and each of them is based on your budget and requirements.
If you opt for a short home loan tenure, you will pay a huge EMI. Although that will decrease the interest, shelving a significant EMI can easily strain anyone’s financial budget. On the other hand, if you opt for a long home loan tenure, though you can pay a convenient EMI amount every month, you end up paying significant interest money at the end of the loan tenure.
To have the best of both worlds, make sure you pick a loan tenure that neither strains your budget nor burdens you with a massive interest burden. Hit a middle ground and make home loan repayment an easy breeze. Pre-empt your home loan EMI before applying for the loan with a home loan EMI calculator to help you tread in the right direction.
For a home loan of INR 50 lakh at a 8.75%* interest rate, the total interest payable for a 10-year tenor is INR 22.76 lakh. Once you increase the tenor to 20 years, the home loan interest swells to INR 50.29 lakh! Hence, while taking a home loan, try to adjust your tenor to pay the maximum amount you are capable of every month. Eventually, you will realize that you can take up a higher EMI as your income grows.
Additional Read: Should The Interest Rate Be The Only Criterion While Choosing A Home Loan?
2. Make Sure to Pay as Many Prepayments as Possible
Did you know that the EMIs you pay initially go towards the interest levied on your home loan amount? That means that regular prepayments in the initial years of the home loan can help you significantly cut down on the home loan interest. If you’ve received a bonus or now have an additional source of income, reserve it for your home loan prepayments. This is undoubtedly one of the best ways to reduce home loan interest. The best bit? If you have a floating home loan interest rate, your lender most likely won’t even charge you any prepayment fee.
3. Look to Get Better Home Loan Interest Rates
If you have been consistent with your timely EMI payments and have a higher credit score, you stand a chance to get better interest rates on the upfront payment of rate of interest conversion fees. File an application for a reduced home loan interest rate with your lender for the same. This will reduce your total remaining home loan interest outlay provided the above two conditions are being met. Additionally, ask them to increase your EMI slightly to reflect your income growth. This way, you can pay off the loan amount quicker.
4. Go for a Home Loan Balance Transfer
Is your lender unwilling to revise your home loan interest rate? Then it always pays to consider a home loan balance transfer to reduce home loan interest rate. In essence, a home loan balance transfer is transferring your remaining home loan amount to a new lender who is offering you better home loan interest rates and other terms.
This is usually the case if your current lender charges a higher interest rate than others. Additionally, many lenders come out with exclusive offers and opportunities for home loan balance transfers to help you reduce your overall loan liability. PNB Housing offers home loan balance transfers at low-interest rates starting at 8.75% for 30 years tenure.
Must Read: An Essential Guide to Home Loan Balance Transfer
Some Additional Tips
- Another tip on how to reduce your home loan interest rate that experts suggest is shifting to a floating rate from a fixed-rate loan, if you’ve availed of a home loan at the fixed rate of interest in the first place. keep in mind that the interest obligation towards a fixed interest rate is often more than the floating one. Considering a switch might be a good idea with home loan interest rates at a historic low. However, getting a fixed home loan interest is a rare matter these days as most lenders offer floating interest rates at affordable prices.
- If you’re signing off on a home loan, consider paying the highest amount of down payment possible. Remember, the higher you pay, the lesser the overall loan amount and the interest levied.
Conclusion
With that, you now have expert answers on how to reduce your home loan interest rate. Of course, there are always many nuances involved in getting a reduced home loan interest rate. Each lender offers specific deals to bring down the interest rate and reduce your total home loan liability.
At PNB Housing, we pass on the minimum rate hikes to all existing customers to make their home loan interest more economical. We don’t charge any repayment/foreclosure fee on floating interest loans. Connect with our experts today to get the best possible home loan interest rates in the market.
