Home-buyers in urban India have, for a very long time, been bearing the brunt of exorbitant prices quoted by property builders of different categories. As a result, securing a good home loan at an interest rate not too heavy on your wallet becomes important. Property markets have appreciated considerably across Indian cities and the average salaried citizen is forced to secure a home loan for financing his new house.
In a household, EMIs form part of a major chunk of the entire monthly expenditure. The period of a home loan usually, is lengthy and may extend up to 30 years in some cases. Keeping in mind your monthly expenditure and finances, you need to settle for an EMI figure suitable to you.
Get to know your EMI figure here on Loanbaba’s EMI calculator, a free-to-use tool.
The most critical choice to be made at a juncture as this is whether to go for a home loan with a steeper EMI and a shorter loan period or a relatively lower EMI and an elongated loan period. In such a case, one must be wary of the extra money an applicant ends up spending in interest while the period of loan is longer.
So we have chalked out a few quick tips to relax the burden of EMI of any home loan:
A] Lump-sum payment tips
1) Right at the outset, if you manage to bear the financial responsibility of paying up a larger sum of money in down payment, then, by all means, do it. This reduces pre-set principal figure proportionately and therefore, you have to pay a lesser amount in interest as well.
2) A loan is a burden not just financially but mentally as well. Every year, arrangements could be made so as to pay out a sum apart from the home loan EMI (min. Rs. 10,000 is accepted by most banks). Yearly bonus or an additional income source must be put to optimal use in this way.
B] Other tips
1) Relationship with Bank: Renegotiate interest rate with the associated bank. Also, keep a check on any changes in RBI’s guidelines on interest rates of loans. It is best to secure a loan from a bank where you are an account holder as there is an established relationship with the lender in such a case.
2) Balance transfer: If you are choking up on a steep rate of interest, you may be eligible for a loan at a much lower rate of interest from another bank. In a situation like that, balance transfer of your entire amount of home loan will prove to be a sensible option.
Currently, the least interest offered by leading banks is 8.35%. SBI is one of them. This may seem like an obvious, natural step to take but having a good credit history is essential in order to undergo a beneficial refinancing of your home loan.
3) Increasing the tenure: Only a dire situation where chalking out the existing home loan EMI itself is a difficult task, you may consider increasing the loan tenure. This means, repaying your home loan in lower instalments providing financial relief with immediate effect. But take note that this significantly adds to the interest outgo figure you end up spending over the course of time.
Choosing the right lender for a mortgage loan may get confusing. To compare differences amongst the most credible lenders in the industry, compare housing loans on our website.