Homeownership is definitely an expensive decision to make. Especially when you are taking a loan to finance the purchase, affordability starts to play a more vital role. Getting the best EMI is not that easy; you need to keep track of your loan status and make changes accordingly to ensure the best possible rate.
Here are six ways to reduce your home loan instalments discussed at length:
6 Simple Ways to Reduce Your Home Loan EMI
Interest Rate Regimes
There are several different interest rate pricing regimes that function independently. Different regimes have the best interest rates at different times. Therefore, making it essential to keep a check on the same. The likelihood of you paying a significantly increased interest rate under older regimes is very high. If you see a more financially viable option with a lower home loan EMI
, you can contact your bank and change your regimen by paying a nominal shifting fee.
Make a Prepayment in Part
A great way to lower your EMI is by making a partial prepayment during your tenure. Doing this will help you disburse a chunk of the total loan amount and, therefore, reduce the EMI you pay. Simple techniques like saving your bonuses or extra income through a different avenue can aid in making this prepayment.
Transfer to Another Lender
Most lenders and financial institutions give borrowers the option to transfer their loans to other banks or lenders. It is an excellent feature that you should use. Comparing loan offers from different lenders does not stop after you have received the loan amount. It is essential that you keep checking other interest rates over the tenure and transfer your loan to that lender accordingly.
Extend the Tenure
It is only predictable that if you extend your tenure for home loan
, your outgo for each instalment will decrease if you extend your tenure. If you are facing major financial constraints, this is the best way to get some relief from it and pay at a more suitable pace.
Fixed and Floating Rates
You are likely to pay a higher price when you undertake a housing loan that has a fixed rate. Lenders tend to charge approximately 1-2% more on fixed-rate loans. You can either take a floating rate loan from the get-go, or you can shift to a floating rate if your lender allows. If your lender does have this provision, then keep a close eye on the floating rates and shift based on it.
Due to the pandemic, many people have faced financial woes that have led to an inability to pay EMIs. To help, the RBI has made a provision for restructuring the loans. All you need to do is contact your lender and ask them for restructuring. They will then waive off your EMIs for a while and extend the tenure accordingly.
Take all the points mentioned above into consideration and chalk out how you want to make your loan as affordable as possible. Resort to a lender that offers these provisions, and you are all set!