Of course, a housing loan is a smart way of financing your dream abode. But if you are wondering how to save money on home loan repayment, this is the article for you. Read on.
Maximise your down payment
Lenders typically award a housing loan for 75%-90% of the property’s total value. Here, you pay the remaining 10%-25% as an upfront lump sum, also called a down payment. Hence, if you make a bigger down payment, it can lower your EMI burden significantly. Moreover, a higher down payment capability can help you qualify for more affordable home loan interest rates.
Prepay your loan; make additional payments
Prepaying your loan can considerably reduce the total repayment costs. Although it requires tremendous financial discipline to make additional large payments, it goes a long way in reducing your interest burden in the long run. You can make these payments with the help of a surplus left in your account at the end of any year, annual bonuses, market investment returns, etc.
Additionally, you can try to make as many prepayments towards the beginning of your loan term because it lowers your overall interest payable.
Conduct thorough research before applying for a housing loan. Two lenders may have the same interest rates, but the processing fees and other loan-related charges vary. Some lending institutions might have appealing seasonal offers when you take a loan, review these deals as they may put you at an advantage.
You can also make use of a home loan EMI calculator to get an exact estimate of your future EMIs and interest payable before approaching the financier.
Additional Read: Home Loan EMI & How Online Calculators Can Help You Save Money?
Improve your loan eligibility
Before you apply for a loan, ensure that you fulfil the lender’s prescribed eligibility conditions. Besides, check your credit or CIBIL score. Why? That’s because your credit score helps the lender determine your repayment capability and risk profile. Therefore, if you have an impressive CIBIL score, preferably above 750, your preferred lender can extend you a good deal on your home loan along with competitive interest rates.
Avail of tax benefits
Under Section 24 of the Income Tax Act, you can claim tax benefits worth Rs. 1.5 lakh on the interest amount paid. Moreover, under section 80C, you can claim a maximum deduction of Rs. 1 lakh on your principal amount.
Opt for a loan balance transfer
In balance transfer, you switch your lender for one willing to offer you home finance at lower interest rates. This will ultimately have you pay a lower interest amount overall. With a good track record of timely EMI payments, you can easily find a lender for a loan balance transfer.
Additional Read: What Is the Role of CIBIL Score in Getting a Home Loan?
To sum it up
Now that you know how to save money on your mortgage, it’s time to choose a trusted lender to finance your home purchase. With affordable interest rates, starting at 6.70%, flexible repayment terms, and easy-to-meet eligibility criteria, Tata Capital is here for you!
Avail of custom loans worth Rs. 5 crores and tenure of up to 30 years based on your needs and repayment capacity. Visit our website to check out our loan eligibility criteria now!