Having a home of one’s own is a proud moment in an individual’s life. Thanks to financial products like home loans, many such dreams are materializing. Today, there are several financial institutions in the market providing a variety of home loan products to woo the potential borrower.
Interest is an indispensible component in a home loan. A person who takes up a home loan ends up paying a significant amount of his earnings on the home loan interest rate component during the tenure of the loan. Even though there are several financial lenders offering low home loan interest rates, it’s a given, that a majority of a person’s money is lost in paying interest than the actual loan amount.
Is there a way to eliminate home loan interest rate?
Reduce Home Loan Interest Rate
Technically speaking, eliminating home loan interest rate is impossible as lenders earn through these interest rates. But there are several ways to reduce the burden of home loan interest rate.
Let’s take a look at the below listed sure-shot tips to reduce home loan interest rate:
- Always maintain a good credit score
Having a good credit score is the real icing on the top as lenders would be more than willing to offer such a borrower – a better home loan interest rate. A credit score of above 750 is considered exceptionally good.
- Increase down payment
If one has a sufficient source of income, it always advisable to make a larger down payment as this would significantly lower the loan amount thus, lowering the home loan interest rate.
- Opt for a shorter loan tenure
Despite having to pay a higher amount as EMI (Equated Monthly Installments), it is better to opt for a shorter duration as one needn’t keep on paying the home loan interest rate for a long period of time.
- Do a thorough research online
Carry out a thorough check and compare the home loan interest rates offered by different financial lenders. It is an awesome way to zero in on a perfect lender offering affordable interest rates.
- Go for a floating interest rate
If one is trapped in a state of confusion as to whether to opt for a fixed rate of interest or a floating rate of interest, it is wise to opt for a floating rate of interest as the interest rate keeps changing according to the market rate of interest. So, when the market rates are low one can enjoy the benefits of a lower home loan interest rate.
- Be regular in prepayments
It is extremely beneficial to pay more towards the interest rates in the initial years of the home loan as this would help in significantly reducing the burden of home loan interest rate at a later period in the future.
- Revise EMI rates yearly
Discuss with one’s lender regarding revisal of the home loan EMI. When one receives a bonus or hike in salary one can opt for a higher EMI and at other times, a lower EMI.
- Refinance home loan
If one thinks that the home loan interest rates are too high, one can approach the lender to reduce the interest rate. If the borrower is a long standing customer, a lender might oblige. If that doesn’t work, opt for a home loan balance transfer to another lender with lower home loan interest rates.
- Increase the loan tenure and choose a SIP (Systematic Investment Plan)
Investing an amount equal to 10% of current EMI can help one in getting the entire cost of the home loan back at the end of the home loan term. Sounds wonderful?
- Avoid skipping EMI payments
Never consider skipping EMI as this can lead to accumulation of the EMI rates which would make it costlier in the future to pay off the debt.
Apart from the above mentioned tips, try maintaining a warm and cordial relationship with one’s home loan lender to get better deals on home loan interest rates.
Reducing home loan interest rates is no longer an uphill task!
Comments are closed.