Individuals who have already taken a home loan must be aware of the EMI they are liable to pay every month. However, those who do not have an active loan and looking forward to opting for a home loan must evaluate their monthly instalments before applying for this credit facility.
For many, a considerable amount of the monthly budget goes into paying the EMIs for an active credit facility. In this context, here are the ways to reduce home loan EMI so that it does not become a burden on financial goals.
Steps to know the monthly EMIs for a home loan
Several financial institutions provide free-to-use online applications, such as EMI calculator, home loan eligibility calculator, stamp duty calculator, etc. One can take the help of a home loan EMI calculator to check their monthly instalments against the borrowed home loan amount. The steps to do the same are as follows:
1: Visit the official portal of the preferred lender and locate the option of home loan EMI calculator.
2: In the principal amount option, enter the required loan amount or drag the slider to adjust it as necessary.
3: Enter the interest rate as charged by the lending institution and provide the desired repayment tenor.
4: On submitting these data, the tool will generate monthly instalments along with the total payable interest.
Ways to reduce the home loan EMIs
Both existing and new borrowers can lower their home loan EMI by practising these methods:
- Existing borrowers
- Opting for the balance transfer facility
With this facility, a borrower can transfer their outstanding home loan amount to a new financial institution offering better services, such as lower interest rates, higher repayment tenor, etc.
- Making part-prepayments
Another way to lower the monthly instalments for a home loan is opting for a part-prepayment whenever possible. In such a case, one can utilise other sources of funds, including incentives, fixed deposits, festive bonuses, etc.
- New borrowers
- Paying a considerable amount as a downpayment
A higher home loan amount leads to higher monthly instalments and vice versa. Hence, if a willing borrower decides to make a higher downpayment, their EMIs reduce significantly. One can use a home loan EMI calculator to determine the downpayment amount as per their financial capabilities.
- Comparing the interest rates
Willing borrowers should know the interest rate on home loan offered by different lenders and choose the one offering the lowest. The interest rate generally varies from lender to lender. Opting for a lower interest rate will also reduce the EMIs accordingly.
- Choosing a longer repayment tenor
Opting for a longer repayment tenor reduces an individual’s monthly instalments. However, one should keep in mind that a longer tenor increases the total payable interest. Hence, willing borrowers should make an informed decision as per their financial goals.
Types of home loans in India
Financial institutions offer the following types of home loans in India:
- House construction loan
- Loan for buying land
- Loan for purchasing a home
- Extension or house expansion loan
- Home conversion loan
- Home improvement loan
- Home loans for NRIs
- Bridged loans
- Stamp duty loans
Willing borrowers should choose the right type of home loan as per their needs. Further, they should make sure to borrow as much as they actually require to fund the expenses related to a property. This will help them manage their finances and save them from financial burden throughout the loan repayment tenor.
Additionally, borrowers can also check the pre-approved offers extended by the top lending partners on financial products like loans against property, home loans etc. These offers expedite the overall lending process and ensure a smooth borrowing experience. Individuals can check the pre-approved offers by entering their names and contact details in the lender’s website.
Both existing borrowers and new applicants can practice the tips mentioned above to ensure lower home loan EMIs. Following these will help them avoid financial burdens on a monthly basis and ensure that they enjoy a smooth and hassle-free borrowing experience.