The home loan market had a growth of 12% around the top seven cities between March 2013-2019. As per this data, it is apparent that India’s prime cities have experienced significant residential real-estate growth. Consequently, with the rise of urbanisation and affordable mortgage rates, the demand for home loans is at its peak.
However, if a home loan borrower is worried about the ensuing financial strain, there are multiple methods to lower home loan interest rate. An urge to own a house, accompanying exciting offers and schemes, makes home loan borrowing a significant investment. Hence, before applying, check out how you can reduce home loan EMI effectively and make your repayment process manageable.
Methods to reduce the interest rate and EMI
- Choose a longer tenor
If a borrower chooses an extended repayment tenor, his/her EMIs will reduce significantly. However, one should only opt for a longer tenor if he/she can afford a higher interest outgo.
One should always calculate the tenor and the payable housing loan interest rate beforehand to have a fair idea about how much home loan EMI he/she can afford to pay at the end of the month.
- Make a substantial down payment
A financial lender is allowed to pay 80%-90% of a property’s value, and the remaining 10%-20% is borne by the borrower availing the home loan. However, instead of making a low down payment, it would be more effective if a borrower pays a higher amount at the outset.
The higher amount a borrower contributes as a down payment, the lesser will be the amount borrowed. However, it is to be remembered that one should not overstretch his/her financial capacity or put other things at stake.
- Existing borrower
If an individual is already running a home loan and seeking a lower home loan interest rate for a reduced EMI amount, they can look out for other financial institutions willing to offer competitive interest rates compared to the present lender. Moreover, one should be aware of the charges involved during the transfer. Hence, before switching to other financial lenders, one should know the steps to apply for a home loan balance transfer.
- Home loan prepayment
If a borrower has a sudden influx of cash, he/she should try to prepay the home loan before the end of tenor and reduce the overall interest payment. Prepayment of EMIs will significantly lower payable interest amount.
Suppose a borrower settles some of his/her loan amount through prepayment. This can help reduce the EMI amount in the latter half of repayment. Nonetheless, this can attract several charges from the financial institution.
It is, therefore, crucial to ensure that the lender keeps the prepayment charges minimal before applying for the advance.
Individuals should also look for other benefits like pre-approved offers that make the loan availing process more straightforward and less time-consuming. Such lucrative offers are available on other financial products such as loan against property, home loan and more. You can check your pre-approved offer by providing your name and contact information.
As RBI’s Repo rate has decreased by a certain percentage, prospective borrowers can use this opportunity to buy a property with exclusive offers. While top financial institutions have made availing financing easier, borrowers should consider the factors that can significantly lower home loan interest rate and EMIs.
