Home loans are convenient options to gain substantial funds when purchasing homes or for their construction. Like all term loans, individuals need to service EMIs while repaying this credit. Smart borrowers can save more on the home loan EMI, leading to limited financial strain. An individual can proceed with strategic planning to reduce the stress of personal expenditure.
Top six ways to reduce home loan EMI burden
1. Opt for a long tenure
An efficient way to reduce the home loan EMI burden is to pick significant repayment tenure. In most cases, lenders offer tenure, ranging up to 20 years. However, keep in mind that extending the repayment term also increases a loan’s interest outgo.
2. Pay extra amount
Most HFCs and financial institutions allow a borrower to make partial pre-payments between the loan tenure. They provide an option to prepay at least two to three times a year. A smart borrower should try to make at least two pre-payments in a fiscal year to reduce the EMI burden.
3. Negotiate with the home loan manager
An individual with a 750+ CIBIL score and good repayment history can negotiate the interest rate reduction with the lender. Maintaining a good relationship with the lending institution can also elevate the creditworthiness and help in EMI reduction.
- Choose to refinance
A smart way of EMI reduction is opting for a home loan balance transfer. Borrowers can switch their current lender with the one offering lower interest rate and services. This facility also helps a borrower to gain top-up loan easily.
Increase down payment
If a borrower has availed a home loan on a floating interest rate, increasing the down payment helps lower LTV. This eventually reduces EMI.
- Opt for a lower interest rate
The interest rate is again a crucial factor that affects the loan tenure and principal amount. Choosing a lower interest rate when availing a home loan helps in shorter tenure. A loan availed on a lower interest rate enables a borrower to pay off the debts faster and reduce EMI.
Follow these methods to lower your monthly instalments, ensuring a simple and hassle-free credit repayment.
Read Also: Home Loan Installments: Will it be affected by the Repo Rate?
