Home loans are financial instruments that have aided millions of people in obtaining their dream homes. The loan is available from all banks and comes with low-interest rates. Home loans, on the other hand, are the longest-term loans and hence require most of your financial commitment. Though the interest rate is reasonable, keeping it for a long period of time would deplete the majority of your hard-earned cash. As a result, it is recommended that you pay off your home loan as quickly as feasible. Another way to save money on house loans is to take out a low-interest loan.
Comparative Research
Home loan interest rates differ from one bank to the next. Comparative research is also necessary to find the best interest rate on your home loans. This can be done online by going to the websites of various banks and NBFCs. To make things easier, where you can receive all of the offerings from many banks in one location. Remember that getting a home loan is one of the most important financial decisions. you’ll ever make, and you shouldn’t make it without doing your homework first.
Adding Co-applicant
If you want to apply for a home loan, including a co-applicant on your application can help you get a lower interest rate. When the total cost of borrowing is assessed throughout the whole term, it lowers the overall cost of borrowing. Adding a co-applicant lowers the interest rate by 0.50 percent on average. This improves your home loan eligibility and may allow you to obtain a larger loan amount.
Boost credit score
One of the most crucial things that might affect the interest rate on your home loan is your credit score. A lender would always favor a loan applicant with a strong credit score. Since they will be approved for a house loan at the lowest interest rates. However, if you apply for a home loan and don’t have a decent credit score, your loan application may be denied. As a result, checking your credit score before applying for a home loan is critical. If you find it low, take the required actions to enhance it, or contact CIBIL directly if you have any questions.
Go for a balance transfer
A home loan balance transfer, also known as a home loan refinance, is an excellent option to lower your monthly mortgage payment. It is, however, only available on existing house loans. This means that you can only take advantage of a balance transfer if you already have a house loan. To be eligible for one, you must have a good loan repayment history. And have had a house loan for at least two to five years (this period depends on your lender). When you use this service, your current home loan is closed with your current lender. And the outstanding balance is transferred to the new lender. A house loan balance transfer is typically done to lower the interest rate. On the loan or to obtain better/favorable loan terms.
Do prepayment or a part payment
Going for a part-payment or pre-payment will not lower your house loan interest rate, but it will save you a lot of money in interest payments. So, whenever you have some extra money, bonuses, or incentives, you can utilize them to pay off your mortgage. This will lower the principal amount owed to you and perhaps save you money on interest payments.
When you make a part-payment or prepayment, you usually have two options: one is to shorten the term of your loan, and the other is to lower your monthly EMI. As a result, you must choose one that meets your needs and then proceed with it.
Will refinancing your home loan help reduce interest?
A lower EMI is the result of a lowered home loan interest rate. Borrowers typically refinance their outstanding loan amount in order to lower their home loan interest rate. Refinancing a house loan can be difficult because the lender’s loan prepayment fee and other service charges can add up to a bigger sum, resulting in lower interest savings. You can use an online home loan EMI calculator on a third-party website or a bank website to see if refinancing a house loan will save you money on interest. On a home loan of Rs.50 lakh, for example, if the home loan interest rate drops from 10% to 9% p.a., the EMI drops from Rs.45,435 to Rs.41,960.
Higher down payment
You may not realize it, but putting down a larger down payment on a home loan can lower your EMI payments. The principal amount of your loan will be reduced if you make a larger down payment. This can be explained in the following way. Suppose you want to buy a property for 70 lakhs, and you pay 10 lakhs as a down payment. Then you only have to pay EMI for the remaining 70 lakhs plus interest.
