Buying a Reduce Home Loan where you can relax and recharge your batteries after a day’s hard work is an expensive dream that all see and only a few fulfill it in reality.
With the passage of time, the prices of real estate properties have surged in the recent past. Not everyone has the home loan eligibility to avail a home loan to fund his/her dream as it’s a long-term commitment and affect people’s income for long.
Further, the cost of the Reduce Home Loan also includes the interest rate which makes the EMI expensive. However, that does not mean you should not fulfill your dream of having your own home.
Yes, According to RBI home loan guidelines, if you are an existing home loan customer or someone who wants to avail a home loan in the future can reduce home loan rates by following some tips.
This post will help you know some easy tips that will help you ease out the interest burden for your ongoing or ensuing home loan.
Reduce Home Loan interest rates: Follow these tips to reduce your burden
Opt for a long home loan tenor
If you can opt for an extended home loan tenor, you can easily reduce your home loan interest rates because your principal and interest get distributed over many months. The immediate benefit of selecting a longer tenor for a housing loan would help you repay smaller Reduce Home Loan EMIs which will help you manage your monthly outflow. However, in the longer run, you will need to pay compounding interest rates for opting for a longer tenor.
Pay more down payment
No lender will approve a 100% cost of your home that you intend to buy. Hence, you can get a home loan that may cover 80-85% of the cost of your new home. The remaining amount is to be arranged by the home buyer which is called the down payment. Thus, when you decide to put more money as the down payment, you intend to reduce your principal. The concept is simple to understand – the smaller your principal, the lower will be your interest and you will pay lower EMI. By doing this, you will not only end up reducing the Reduce Home Loan interest rate but even pay off the loan quickly.
Make prepayment a habit
One of the other ways to ensure that you pay a lower interest rate for your ongoing or an upcoming home loan is making some prepayments towards in higher value. If you can afford it, you must do it during the initial phase of your loan. Making prepayment can help you significantly reduce your principal and also aids in paying lower subsequent payments.
Switch to a lower rate
If you have availed a housing loan from a non-banking finance company (NBFC) or a housing finance company, you can switch to a lower rate by paying a conversion fee. Housing loan companies manage to do this by spreading the cost which leads to the reduced interest rate.
Opt for the home loan balance transfer facility
If you have followed all the discussed tips and yet unable to bring the Reduce Home Loan interest rate down, it’s time to find another lender offering a lower interest rate or offering an MCLR home loan. Existing home loan customers need not suffer from the nuisance of paying more interest rate when they can make the most of the home loan balance transfer facility. Home loan balance transfer helps you transfer your home loan account from your existing lender to another lender offering a reduced rate. For availing this facility, you will need to pay some fee and processing charges to your existing lender. You can also ask for a top-up loan when switching the loan from your new lender. You can get up to Rs.50 lakh as a top-up loan to help cover other needs at a lower rate and an extended tenor.
The Bottom Line
With the above suggested tips what extra you can do is don’t cloud your judgement because of rate hike while going for a new home loan or for balance transfer. Whether you area first time home loan seeker, a new borrower or you are an existing borrower, beware of the mistakes that borrowers generally tend to make. While going for buying an under construction property always use to look the lenders whose terms and conditions are very clear in terms to protect your interest rates. Finally, remember always that as it is a huge investment, it is advised not to pay agreement value at once. It will be good if you take a loan on the basis of capacity of repayment.
Now that you know how to reduce the home loan interest rate, try to follow the discussed tips and then apply for a home loan or reduce the burden of your ongoing one.