At a time when a fragile economy is sucking the lifeblood out of most people, making regular loan payments is challenging. For those who have taken home loans, where the EMIs are incredibly high, this challenge becomes tougher.
Cutting down EMI payments seems to be an efficient way of surviving in a lousy economy. As a borrower, if you too are looking for ways to make your home loans easy by reducing your EMI payments, follow the tips mentioned below!
While taking your loan, you might have chosen a lender who offers a high home loan interest rate. If you have now found a new lender willing to offer significantly lower interest rates, consider changing your lender mid-loan. Even if you do not find a lender with a lower home loan interest rate, you should seek one willing to extend your repayment tenure. Before you change lenders, use an online home loan EMI calculator to know precisely by how much your EMIs can go down.
Changing lenders is extremely convenient, and all you need to do is approach your existing and new lenders and request for a loan balance transfer. Refinancing your housing loan at a lower interest rate is one of the easiest ways to lower EMIs.
Loan prepayments previously came with a lot of fees. Recently, however, most banks and NBFCs have stopped taking prepayment fees, allowing borrowers to repay vast sums of their home loans before the end of tenure. If you wish to lower your EMIs and the amount of interest charged, prepaying your home loan online or offline at the beginning of your repayment tenure is an excellent strategy.
While this tip is not applicable for existing borrowers, prospective borrowers can benefit a lot from it. Since home loans cover only 70-90% of the total price of buying a house, down payments are used to cover the remaining costs. A higher down payment reduces the principal loan amount, which means that the interest payable and the EMI charged automatically reduces. If you have any extra savings or funds you can use to make a significant down payment while applying for a home loan, do not hesitate from doing so.
If no other option works for you, extending your home loan tenure by requesting your existing lender is an excellent way to reduce your EMI. Remember that with a longer loan repayment tenure, you will have to pay more interest, but your EMIs will significantly come down. Negotiate with your lender to extend your repayment tenure. Determine the exact amount of interest you will pay by using a home loan EMI calculator before making this decision.
Before you choose a lender, ensure that you read and fulfil the home loan eligibility criteria imposed by your lending institution on tenure extension, refinancing, or prepayment. Use clever financial planning and pounce on opportunities for interest or EMI reduction whenever possible. However, be wary of EMI reduction methods that demand higher home loan interest payments.
With adequate planning, you can easily apply for home loan with reduced housing loan EMI burden and keep your savings safe for emergencies.