Home is the most valuable investment you will make in your lifetime. This holds true in both monetary and emotional senses. In the monetary sense, it assures the financial security of you and your loved ones. In the emotional sense, it holds immense significance, as it witnesses the most important events and memories of your life. Before buying a home seemed like a very distant dream.
However, now you can realise your dream of buying a home, thanks to Home Loan. You can avail a significant Loan amount at a competitive interest rate for a flexible tenure. You can repay the Loan in Equated Monthly Instalments. Pay attention to the EMI payable as it will be spread across your repayment tenure. If you are an existing Home Loan borrower wanting to reduce your EMI burden, following are some useful tips:
Make pre-payments
Pre-payment means paying your EMI dues before time. There are two types of pre-payments you can make: partial and complete. If you have the means, you should surely consider making partial pre-payments. This helps repay your principal amount faster, which in turn reduces your interest liability. Note, a few financial institutions allow you to make pre-payments free of charge, while others charge for it.
Either way, you should consider making pre-payments. Utilise your savings and employee bonuses to make pre-payments.
Consider switching to floating rates
Interest rates are of two types: fixed and floating. The fixed interest rate remains fixed throughout your repayment tenure. Given this, your EMI payable remains fixed. Floating interest rate change through your repayment tenure. Due to this your EMI payable changes. If your Loan repayment is based on the fixed interest rate regime, consider switching to the floating interest rate. This lets you benefit from the lowest Home Loan interest rate.
Extend your repayment tenure
There is also an option to extend your Loan repayment tenure. This helps reduce your EMI burden considerably. However, it's best to keep this option as your last resort. This is because as your tenure increases, your interest liability increases. It's like kicking the can just further down the road.
Opt for a balance transfer
When you signed up for your existing Loan, you considered it to be the best deal then. However, now if you have another bank offering Loan at a lower interest rate, you can switch to them by opting for a Home Loan balance transfer. Note, that the lowest Home Loan interest rate will apply to the remaining principal amount. This reduces your EMI burden for the rest of the tenure considerably. Explore the market and scout for the lowest interest rates.
