Home loans are an easy way to accomplish all your projects concerning your dream home may it be a home extension project, home renovation project, buying a plot, etc. As the nation is witnessing swift urbanisation in the past few years, it is raising demand for lands and homes. This demand has brought a steep rise in the curve of growth of the home loan market to 28% and is anticipated to escalate by another 12% by 2025. There are a few strategies which if employed can help to curb home loan EMI.
Let us discuss those in detail.
Ways to curtail home loan EMI
The EMI value generated mainly depends on three factors, loan amount, tenure of loan, and interest rate. Let us look at some ways to decrease the EMI value by manipulating these factors.
Collate interest rates on home loans Investing some time in comparing the interest rates offered by various financial institutions on home loans is quite crucial and can save a lot of your money on interest payments. This, in turn, will help you reduce your EMI value by lowering the net interest amount. There are sites that can show you a direct comparison of the interest rates and other features of different home loan schemes making your job much easier. But make sure to check home loan eligibility before applying for a home loan scheme.
Opt for a longer tenure
Increasing the home loan tenure can decrease your EMI value substantially. Imagine the net amount getting shared over a few more months. Although there is a downside to doing this that you should know about. Opting for a longer tenure means you have to spend more on interest. But if you feel like lowering your EMI value is crucial to maintain your financial stability then it is worth going for.
Try to maximize the down payment
Maxing out on down payments will lower your requirement for the loan amount. Subtract the down payment from the net capital requirement and use the result as a figure for the loan amount. This can help reduce your interest payments by lowering the loan amount. This will also curtail your EMI value to a great extent.
Refinance your loan
Home loans provide an option to refinance your remaining loan amount. Hence, keep your eyes open for lenders offering home loans at a better interest rate than the existing ones. If you find one, you can easily refinance your loan enjoying a lower interest rate and reduced home loan EMI value.
Make some prepayments
Since home loans are usually borrowed by people for a tenure of 15 to 20 years, there is a good chance that you acquire some superfluous capital in the middle of the loan tenure. This may be because of a substantial rise in pay scale, maturing of a fixed deposit, or maybe you are done paying EMI of some other loan that you might have opted for. Instead of using the surplus amount elsewhere, you can use it for a home loan prepayment. Most financial institutions allow a prepayment at nominal to no extra charges. Going for a prepayment can significantly decrease your home loan EMI value.
By using these handy tips, a borrower can consider reducing a prospective or incumbent home loan EMI