Are you an existing home loan customer who is repaying the housing finance that you took for buying your dream home? If you are the one, you may know that a home loan repayment is a lengthy process which demands to pay EMIs for a longer time.
However, along with the principal amount, the customer also needs to pay a home loan interest rate which increases the cost of the repayment.
If you are a current home loan customer who is miffed with paying a higher home loan interest rate which is coughing a portion of your monthly income, you can bring it down.
Yes, there are some valid methods that can help you bring down your existing home interest rates so that you can save some money or divert it towards other goals. This article will talk about such steps that will help you save easy, read on!
Opt for a shorter tenor
Did you know that stretching your home loan repayments over a longer tenor means paying more interest? Thus, it should be your duty to ensure choosing the right home loan tenor during the onset with the help of a home loan EMI calculator. Yes, opting for a shorter tenor may lead to the payment of higher loan EMIs. But that will also assist in paying off the loan quickly and saving on compounding interest.
Make continued and consistent regular payments
You need to note that the EMI of the home loan comprises of two parts: interest levied on the borrowed amount and the principal. When your home loan account is still new, you pay towards the charged interest and less towards the principal. Thus, it is smart to make some part prepayments if you can. You can use the bonus that you get yearly to make some prepayments and reduce the burden. Most of the leading lenders let you make prepayments without asking for any charges.
Opt for a home loan balance transfer
One of the many relevant methods to bring down the burden of home loan interest rates is by opting for a home loan balance transfer facility. The home loan balance transfer is a unique facility offered by reputed lenders. It can let you switch your home loan account from one lender charging a higher interest rate to one offering a lower rate. For availing the facility, you need to pay a convenience charge to your old lender which may be 1% of the total amount remaining to be paid along with some other processing charges. If you think that the processing and other charges are more than what you will save on doing the home loan balance transfer, you can avoid doing that.
Look for revising the EMI payouts yearly
Another thing to bring down the burden of the home loan interest rates will be resetting your EMIs annually. Some lenders allow you to adjust your EMIs annually. Thus, once you receive a salary appraisal or get a consistent increase in your overall income, you can increase the EMI amount. For every 10% increase that you get in your salary, even increasing the home loan EMI to 5% will help you reduce the interest burden. It may seem a small percentage on the paper, but the EMI increase will help lessen the tenor and also reduce the principal.
The Bottom Line
Some of the major steps to help you bring down the burden of home loan interest rate is revealed to you. It’s up to you to pick up a step that matches with your needs. All the best!