Want to use a home loan but reduce the interest burden? There are several ways to do that. Right before applying for the loan, it’s best to use an online house loan calculator. It lets you choose a reasonable interest rate, loan amount, and tenure to settle for a payable EMI amount. Still, later you may find it challenging to afford the EMIs due to the added interest. So, here are fascinating quick tips to help lower the interest burden.
Top 5 Tips on How to Reduce Interest Burden on Home Loan
- Try to Get the Best Interest Rate
Choose the bank that offers attractive home loan interest rates. If you have good creditworthiness or a high CIBIL score (700-900), you can easily enjoy low-interest rates. Some banks even offer competitive interest rates to salaried individuals who borrow more than 30,00,000 INR. See if the chosen bank gives access to floating interest rates. These are usually lower than fixed rates and help you save a lot of money.
- Choose a Short Tenure
If you can afford to spend higher EMIs, consider choosing a short repayment tenure. Then you will be paying home loan interest for fewer months, and thereby reducing its burden considerably. The best bank for house loans offers a tenure as long as 30 years. This gives you enough time to let your income grow. So, you may be able to increase the EMI amounts much before the loan term expires.
- Make a Large Down Payment
A good bank offers a home loan that can finance up to 90% of a property value. You need to pay the remaining 10% as a down payment before using the loan. But the good news is it does not have any maximum limit. So, if you can afford it, then consider making a sizeable down payment. Then the outstanding loan amount will reduce. Naturally, the interest load will also lighten. Check how much more you need to pay using an online house loan calculator.
- Go for a Large Prepayment
Can you arrange surplus funds well ahead of the expiry of the loan tenure? Then see if you can make a large part payment or a full prepayment in one go. Then the interest is added once to this bulk amount. So, you need not pay interest on multiple EMIs. If you make a part prepayment, use a house loan calculator to check the outstanding amount. You can then pay it with reduced EMIs over the same tenure or vice-versa.
- Try Balance Transfer to Get a Better Interest Rate
This is another way to reduce the payable interest. Consider transferring your existing loan balance to a bank that offers a lower home loan interest rate. Then you can pay the outstanding EMIs with a reduced interest. Use the house loan calculator to finalize an affordable EMI amount based on the chosen interest rate and a suitable tenure.
Don’t fret when it becomes hard to repay a home loan. Try the above tips on how to reduce the interest burden on home loan and pay the outstanding balance smoothly.