Buying a home is a dream for many. It is a sense of security to some. It is continuity in the same abode for others. However, the cost of realising that dream can prove a costly affair. But don’t fret just yet. If you are considering taking a home loan or servicing one already, there are assured ways of making your loan more affordable.
Wondering how to reduce your home loan obligations? Here are six ways to get started.
1. Boost your credit score
Financial institutions will consider your credit score to evaluate your loan suitability. While a good score of 750 or more is desirable, even a score of 600 or above is not bad at all. You will still be in a better position to negotiate for better interest rate and terms, whether you’re taking a new loan or refinancing your existing one. However, make constant efforts to boost your credit score by paying your bills timely etc
2. Research well
Before signing off a loan deal, research all your alternatives. Take time to explore different loan offers and compare various lenders. Go for reputed entities. Consider current ROIs, processing fees, EMI flexibility, and other determinants. Do your research right if you’ve been searching for how to reduce your home loan EMI. It is possible you might come across competitive offers by the time of actual house purchase, and that will help you save a lot of money. Make the best of this strategy.
3. Go for a balance transfer
A few months into your tenure, be mindful. You can consider going for a home loan balance transfer if the EMI outgo is hefty. You may find a different lender offering the option at a lower interest rate. If you transfer, you can save a substantial sum in the long run. Just ensure the cost of transferring the balance is not more than the savings. A home loan EMI calculator can help you with the computations.
4. Negotiate with the lender
If you want to know how to save interest on home loan,start with your lender.
Many borrowers are simply unaware that they can ask their lenders to reduce the interest rates or other loan terms. However, with high creditworthiness, you can negotiate for lower interest rates or better processing fees. Don’t accept the first or second offer you get. If you boast a good credit history, try negotiating and crack a better deal than being offered upfront.
5. Increase your down payment
When you pay a higher down payment, your overall interest payments and EMI obligation will be reduced. This is an important point to keep in mind. While most lenders ask for 20 – 30% of the total property cost as a down payment, you can pay more than the stipulated percentage. This will not only help you bring down the total loan cost, but may even get you a competitive interest rate.
6. Make partial payments
If you’re wondering how to reduce EMI of existing home loans, check if your lender allows partial payments. Check for the process and procedure to choose partial payment option. You can use the facility to reduce your burden in the long run. After all, you may have more cash inflow than your regular income during the tenure. It can come in the form of bonuses, gifts, sale of any fixed assets, and so on. Use this ain judiciously to reduce cost of home loans.
While a home loan might be a huge commitment, with the right measures, you can ensure it doesn’t bear heavily on your pockets. If you are looking for affordable home loan options, turn to Tata Capital.