Steps Home Loan Borrowers can Take to Reduce Interest Rate Burden
Many people don’t want to avail a Home Loan despite having the loan eligibility because they need to repay it along with the interest rates for a longer tenor.
Even existing Housing Loan customers find it tough to manage their Home Loan EMIs because of the principal + loan interest rate burden.
Thus, if you are a current Housing Loan customer or someone who wanted to apply for a Home Loan, let’s provide some tips to reduce the interest burden.
Higher Down Payment
Make it a point to make a higher down payment at the time of applying for a Home Loan. It is because no lender will approve the entire value of your home that you intend to buy and the maximum amount that you can grab will be 80-85%. The remaining 15-20% will need to be arranged on your own as the down payment. Thus, try to put down a higher down payment so that you have to manage to repay only a small portion. Like this, you can reduce the interest rate and enjoy paying only a considerable portion as you already make a higher down payment.
Opt for Home Loan Prepayment
If your lender is not charging any amount to make prepayments towards your Home Loan, you should grab the opportunity to reduce the interest burden. Yes, whenever you get some salary hike or performance bonus, you can make some prepayments. By doing so, you can lessen the interest burden and pay lower Home Loan EMIs further.
Increase your Home Loan EMI Annually
If you can afford to increase your EMI amount once in a year or manage to make one or two extra EMI payment, then you can easily enjoy reducing your loan interest. All salaried individuals get an annual salary hike which can assist salaried loan customers to increase Housing Loan EMI. Taking this easy route can also help you keep off the burden of the repayment of the interest rate.
Check your Credit Score
Want to apply for a Home Loan but afraid to do that fearing higher Home Loan rates? Don’t worry as a maintaining a higher CIBIL Score at the time of applying for the loan can help you avail the best loan rate and manage to pay smaller EMIs. A CIBIL Score of around 750+ or more out of 900 is an ideal score that lenders reward with a proposal of lower rates. You can manage a higher CIBIL Score by paying off all your existing loan EMIs and credit card outstanding on time.
Can a Home Loan Balance Transfer Help You?
If none of the discussed tips works to help you reduce your interest burden, you can easily opt for the Home Loan balance transfer option. The balance transfer option helps anyone serving a higher rate based housing loan to switch from one lender to another and enjoy a lower rate. Your existing lender will charge you at least 1% of the remaining Home Loan principal. Along with this facility, the lender can also give you a top up loan with lower rates and extended tenor up to Rs.50 lakh. You can use the money to fund many other financial needs of your life.
The Bottom Line
Reducing the Home Loan interest rate is super easy if you know tricks. Now that you are aware of those tricks, you can apply for a Home Loan and control it as per your needs.