When the time comes to buy your ideal home, a home loan might assist you financially if you are confident that you can handle the long-term commitment. After all, it’s a huge duty that you’ll be carrying for years, if not decades. The home loan EMIs, on the other hand, which you must factor into your monthly budget for such a lengthy period of time, can keep you financially invested.
In the quarter ended March 2021, home loans sanctioned by financial businesses, including housing finance firms, increased by 76 percent to Rs 79,043 crore, up from Rs 44,907 crore in Q4FY20.
Knowing a few methods to minimize your house loan EMIs might be beneficial for you. Some of the techniques listed below will help you lower your house loan EMIs and live a financially stress-free life!
1. Keep your credit score in check
Check your credit score to make sure it’s at least 725 before applying for a home loan. Applying for a loan with a strong credit score will help you qualify for a better home loan with better terms and conditions.
If your credit score is above 725, the lender may be able to offer you a larger loan amount with lower interest rates.
If your credit score is less than 725, carefully review your credit report to make sure there are no inaccuracies that are lowering your credit score. Dispute the mistake and have it fixed.
2. Compare loans with other lenders
Needless to say, conducting extensive research and comparing lenders based on a variety of parameters such as loan amount, interest rates, and loan tenure are critical. These critical factors might have a major impact on your home loan EMIs.
The interest rate, however, is not the only element that influences the size of your EMI. You should compare lenders based on their processing fees, late payment penalties, and prepayment penalties.
3. Save money for a larger deposit
If you’ve chosen a lender and are ready to apply for a home loan right away, you’ll need to save aside some money for a larger down payment. You can begin saving money as soon as you make the decision to buy a home.
With a greater down payment, you’ll be able to take out a smaller loan for a shorter length of time, improving your housing loan eligibility and allowing you to get a house loan with lower EMIs.
4. Choose your Loan Term Carefully
When deciding on a loan term, you must think carefully. If you want to lower your home loan EMIs, you can choose a longer loan term, which will keep your EMIs low but will result in a greater interest outgo at the conclusion of the loan period. Apply for a fixed rate home loan so that it doesn’t become difficult for you to handle the EMIs.
So, use a house loan EMI calculator to get a loan term and EMIs that you can comfortably manage on a monthly basis. Examine your financial responsibilities and make sure your EMIs don’t consume more than 30-40% of your monthly income.
5. Consider Transferring the balance of your home loan
If your current home loan interest rate is greater than others and you locate a lender that offers a lower rate, you may consider transferring your home loan balance. Switching lenders may lower your EMIs, which can save you a lot of money in the long run.
However, if you are nearing the end of your loan term, this may not be the best option because you will have already repaid the majority of your loan amount as well as the interest rate.
Over to you…
Despite the fact that home loans are costly, you should follow these guidelines to save money on home loan repayment. Always do your homework before asking for a loan. It may seem time-consuming and boring at first, but it will save you a lot of money in the long run.
Keep up with the latest financial news and offers to help you negotiate better terms with your current lender or, in the case of a home loan balance transfer, with a new lender.
Finally, double-check that you understand all of the terms and conditions, as well as any hidden fees. Remember that in order to reach financial independence, you must develop financial discipline.