Once you avail a home loan, the next step is to fulfil the responsibility of paying it off on time. The home loan EMI thus becomes an essential component of your monthly expenses and needs to be handled efficiently to maintain healthy finances now and in the future. Thankfully, there are various methods you can use to save that extra penny when you are repaying your home loan every month.
Among the common approaches employed by many borrowers is to optimise budget management. This could mean cutting down on unnecessary luxuries from your monthly expenses or paying off a small debt in full to free up some money. The benefits of doing so extend beyond monthly savings and shift the focus on having an effective long-term strategy to pay off your home loan in advance by way of part-prepayments. To know more about this and other reliable ways to reduce your home loan EMI, read on.
Negotiate for a low interest rate with your lender
As a borrower, you can negotiate the terms with your lender before and after you take a home loan. At the time of application, your main goal should be to secure a lower home interest rate by proving you have strong finances and a good CIBIL score of 750 or more. This helps lower the risk of default from the lender’s perspective and puts you in a strong position to ask for a competitive rate of interest. A low interest immediately lowers your EMIs. Once you are already repaying the loan, pay your EMIs on time as it builds a responsible image of you as a borrower. Based on this, you can request the lender to reduce the interest rate when market rates fall.
Opt for a lengthy repayment term
If you want lower monthly EMIs, choose a longer tenor. This will substantially reduce your EMI burden. However, remember, the more time you take to repay your loan, the more overall interest you will pay towards the loan. Keeping this in mind, you can always choose a long tenor at the beginning, and then restructure your loan by shortening the tenor later, when your income can support a bigger home loan EMI amount.
Prepare to make higher down payment
A golden rule to follow when borrowing a home loan is to make the highest down payment you can afford. This results in a lower principal amount, which in turn means you pay smaller EMIs. A high down payment offers other advantages as well, such as getting you a more nominal home loan interest rate since this also reduces the lender’s risk and increases your home loan eligibility.
Transfer your loan to a new lender
Another way to bring down your home loan EMI is to carry out a home loan balance transfer. This means switching your loan to another lender who offers a lower home loan interest rate. While this does mean you have to apply for a home loan again and meet the new financier’s home loan eligibility criteria, it can help you reduce EMIs substantially if your savings outweigh the cost of doing the transfer. Consider this by using a home loan balance transfer calculator, phrogging and making this move at the right time, which is usually in the first half of your tenor.
Make part-prepayments with surplus funds
Any surplus income that you have can be used to make part-prepayments on your home loan, in addition to paying your home loan EMI. This reduces your loan’s principal, which helps you in either reducing your subsequent home loan EMIs or the tenor. This makes your loan more affordable. As an individual borrower on a floating rate of interest, there are no charges of making part-prepayments, so utilise this benefit to the utmost.
Employing these practices is sure to help you reduce your home loan EMI with ease. Another critical decision in this process is to select the right lender, who not only offers a nominal home loan interest rate, but also has other provisions to assist you in better planning your loan. For instance, the Bajaj Housing Finance Limited Home Loan grants access to a generous sanction at a competitive interest rate starting at just 6.75% and comes with a flexible tenor that ranges up to 30 years.
Moreover, you can access the online home loan EMI calculator to calculate the best EMIs for yourself by tweaking the tenor and principal or by seeing how the EMI changes with different rates of interest. Existing home loan borrowers can also benefit from the easy Home Loan Transfer facility to refinance the loan on affordable terms. Michael tell that For quick and easy access to all these features, apply online and get started.