A home loan is a secured loan taken against the security of a personal/ business property for the construction, renovation, or expansion of the house. A home loan can be availed up to 90% of the value of the property. Along with the principal amount that is utilised for the house, borrowers also need to pay the monthly instalments and the interest of the home loans. While every bank charges different rates of interest on home loans, presently, home loan interest starts at 7.50%.
Tips to Decrease the EMI Amount of Your Home Loan Interest
An Overview of home loan
- The age group of 18 and 65 years can avail a home loan.
- You can get a home loan between the range of ₹ 2 Lakh to ₹ 15 Cr.
- A home loan is available for a tenure of 5 to 30 years.
- You also have to pay a processing fee of up to 0.5% of the loan amount or maximum Rs. 10,000, whichever is higher.
How you can reduce the EMI amount on your home loan: The interest paid on home loans can increase the burden on your financial budget, especially during the time of financial distress. However, you can reduce the outgo of the rate of interest on your home loan and reduce the EMI amount by using effective ways.
Tips for Reduce home loan interest rates:
Using the overdraft facility to repay the loan:
There are instances where you have a surplus of funds, you can utilise the excess funds to pay the interest on your home loan. You can use the overdraft facility to utilise the excess funds of your account. Along with the regular EMI, the additional amount in the home loan account can be used to reduce the burden of paying interest and the repayment tenure.
Balance Transfer of home loan:
You should make a home loan comparison of different banks and financial institutions. Keeping track of home loan interest rates can help you to repay the home loan at lower interest rates. This can be done by doing the balance transfer of your home loan. While you may have to pay certain fees before transferring the loan to another institution, you can reduce the burden of interest rate by repaying the balance amount using lower interest rates.
Prepayment of home loan:
You can utilise the additional funds earned by the bonus, hike or any other occasion by paying the partial funds of loan or closing the loan before the tenure of the loan is taken. There are prepayment charges that you may have to bear, but you can prevent yourself from paying the interest, which may be a huge burden at the time of crisis.
Using home loan EMI calculator:
EMI calculator to calculate the monthly instalments and interest on your home loan. You can use the online tool to determine the tenure of a home loan. While a shorter tenure means you have to have higher monthly instalments and a longer tenure indicates low EMI. You should opt for shorter tenures as you have to bear less burden of paying the interest on your home loans.
Keeping track of home loan interest rates:
If you wish to reduce the burden of interest on home loans, you should always think about repaying the loan faster. Keeping track of different institutions and making a home loan comparison can help you to switch to another institution with lower interest rates.
Conclusion | Home loan interest
Thus, the outgo of interest can be reduced by repaying as soon as possible. A home loan comparison using a home loan calculator can help you to repay.