5 Best tips to Reduce Interest Rate on your Home Loan
It feels good when you have your personal home. There is no bar of including rent expenses from your budget every month. As you have to shift in your new home, you have to find the best interest rates in the town so that it should make you happier and not feel like a burden to you.
After all, after some time when all the EMIs of home loan will be completed then your home will be your home.
In recent years, there has been a significant amount of drop in home loan rates. Even a little of the difference in the home loan rates could make a huge difference in your budget. The home loan also costs a huge investment as you have to pay monthly EMIs for your home for a certain time period.
Shorten Your Home Loan Duration
If you are in a financial condition that is enough for your living and you are making a considerable amount of savings, it is the time to shorten your duration of the home loan. EMIs that are levied on you for a larger period now could be reduced within a certain limit. This reduction in the time period will also help you to cut the interest rates by some percentage. Interest is calculated on your principal amount and when you pay your principal amount will marginally cut your interest rates also. So try to cut short your home loan duration as per your finances.
Pay Extra EMIs
This is a bit difficult but if you see in your budget, you can cut down your extra expenses and save money to pay an extra EMI for your loan repayment. Extra EMI payment will help in reduction of principal amount also and hence a reduction in your interest rate.
Re-payment of Extra EMI annually
Whenever you get your annual bonus, instead of spending it lavishly, you can invest in the EMI one time in a year. Paying one more EMI installment of your home loan will work well with a reduction in the interest rates as well as the principal amount.
Get Your Home Loan Refinanced
The home loan interest rates vary within time and suddenly it could happen that the rates are slashed down by some percentage. At that time you can switch to a new vendor with low home loan interest rates. You must ensure that all the terms and conditions are satisfied and there should be no problem thereafter. Make sure that savings accrued from a lower rate of interest are not lower than the cost of switching to a housing loan provider, with a lower interest rate.
Shift to Marginal Cost and Affordable Interest Lending Rate
Always go with the EMI amount that you can afford. Paying a high EMI will no doubt lower the interest rate but if you are not able to repay the EMI on time could lead to imposing fine on your loan. To prevent extra payment of fine you have to select the EMI amount with an affordable rate. While applying for any loan that offers low-interest rates, please make sure you zero in on a loan that matches your monthly budget.