Simple Ways to Lower Home Loan Interest Rate
When it comes to arranging funds for buying a new home, nothing can suffice your needs like that of the home loan. The home loan interest rates are on the lower side as it comes with no collateral.
But since the home loan comes with a longer tenure, it hampers the outlays of the borrowers. Also, for stretching the home loan amount over the longer tenure, borrowers may pay reduced EMIs.
But their home loan rates increase and lead to extra expenses. Overall, you have to pay much more than you borrow. On the other hand, shorter loan tenure means paying bigger EMIs, but savings on the home loan rates.
If you wish to apply for the housing loan and still lower the home loan interest rate, then you can follow a few tips to do that. Read on and discover more!
- Try opting for a shorter tenure
The first thing that you can do to lower the home loan rates is going for the shorter tenure. By doing that, you may have to pay bigger loan EMIs, but you will end up saving on the home loan interest rates. This way, you will not only save on interest charges but even pay off the loan much faster. And that would denote that you can get the loan approval for the next debt at a lower rate. How? It is because you will end up having a higher credit score owing to repaying your home loan on time.
- You can also count on prepayments
It may not always be possible for all to opt for smaller tenure as it means affecting the outlays. Hence, you can opt for a longer tenure to pay affordable EMIs and yet lower down home loan rates. How? You can make prepayments during the course of the tenure and bring down the outstanding amount and interest cost. In turn, the overall cost of the loan will also decrease, and you will have savings on the board. But before doing that, you should check if your lender will levy any charges for making prepayments.
- Compare all available loan offers and pick the best deal
Another way to bring down home loan interest rates is by comparing all available housing finance options online. It is possible to do that on a lender’s website for free. You can pick the best deals out of all and as per your needs and the repayment capacity. The facility is available on many third-party websites these days for free of cost.
- You can consider switching your home loan account
If you have already been a home loan customer and managing bigger home loan EMIs, then you don’t need to suffer and keep doing that. It is because you can now opt for the home loan balance transfer facility. The home loan balance transfer lets you switch the loan account from your current lender to one offering lower rates. This way, you can manage to pay reduced EMIs and decrease the cost of your loan. However, before opting for the loan balance transfer, you must check the processing and transfer charges. If it is more than what you can save, then the home loan switching is not a feasible option. These days, most banks and non-banking finance companies offer the home loan balance transfer facility online.
- Pay more as the down payment
None of the home loan lenders will ever sanction the entire cost of the property that you want to buy. The maximum will be up to 80-85%. You will need to arrange the remaining 15-20%. The higher your down payment amount is, the lower will be the remaining housing loan outstanding amount and interest charges. In turn, it will bring down the cost of the home loan in the end.
- Increase the EMI amount/pay extra 1-2 EMIs
Salaried individuals get a yearly increment, and you can use the amount to make way for increased EMIs. It will lower the home loan interest rates and the outstanding amount. You may also receive yearly bonuses, which you can use to pay 1-2 extra EMIs. It will assist you in closing your home loan much faster while helping you pocket savings. Most people use bonuses and an increasing portion of their Salaries for splurging. But if you can use the same smartly, then you can bring down the home loan rates.
By following any of the discussed tips as per your preferences, you can help yourself and keep a tab on home loan interest rates.