By- Sanya Oberoi
Repaying a loan can be a lengthy process. If you haven't chalked out a proper plan, home loan EMIs (equated monthly installments) can severely weigh down on your monthly budget. To alleviate this burden, you may follow a few tips and reduce the interest rates on your loan.
Get used to Making Prepayments
Prepayment is an excellent option to bring down your overall interest on your home loan. You can pay back some amount against the principal loan amount through this option. You ideally pay more towards the interest than the payments made toward the principal amount in the initial years. If you frequently choose prepayments, it will reduce the principal sum to a great extent, reducing the total interest rate.
Do remember to check with your lender or bank regarding any charges on fixed-rate loan prepayments. In general, banks don't have prepayment charges on floating home loan interest rates.
Look for Better Deals
There's no denying that lenders love a good borrower, meaning someone who has a good credit history. It's like reassuring the lender that can repay the money while adhering to all the predetermined terms and conditions.
Banks often roll out favorable terms and discounted rates for existing customers or those who can show a good credit history. In case you don't have a strong credit score, you can try negotiating for a better deal, provided you have a good business relationship with your lender. In other cases, you can look out for festive or seasonal offers.
Prepayment is an excellent option to bring down your overall interest on your home loan.
A Substantial Down Payment
Here's another option to reduce your interest rate. If you contribute a substantial amount as a down payment in the initial phase of your loan, your loan amount will most likely be lower. As a result, you won't have to bother paying a huge interest rate.
Home loan balance transfer is a feasible alternative if you are servicing a high rate of interest for an existing loan. However, this option is applicable only if you have already started paying EMIs against a particular home loan. If you feel that the current interest rate charged by your lender is on the higher side, you can opt to transfer the outstanding balance to another lender for a lower interest rate.
While this is a possible option, loan transfer should be the last resort when you run out of all other options. Also, remember that any missed payment on such transfer-based loans can incur heavy penalties. So, think twice before you take this leap!
Increase your EMIs
This is a well-known tactic preferred by most loan borrowers. The longer you take to repay a loan, the higher the interest rate. So if you raise the amount of your EMI, not only will your loan be paid off within a shorter time, but it'll also considerably bring down the rate of interest.
Loan repayments won't be a stress if you follow these clever tips. Besides, a better advice would be to do thorough online research by comparing home loan interest rates today!
Disclaimer: (This article is sponsored and includes some commercial links)