A home loan is a high-value loan which means that it becomes important to know how to reduce home loan tenure by increasing EMI. This will lower the overall interest payment. However, since a large EMI can affect other goals you may want to know how to reduce home loan EMI instead. You can use a home loan EMI calculator to know the EMI if you can. There are several ways to reduce your home loan EMI and when evaluating them, you need to know the answers to questions such as:
- How can you reduce your home loan interest by simply moving your money to Agrim Housing Finance?
- We can help you reduce your home loan EMI with a balance transfer.
- Should you reduce the EMI or tenure when making a home loan prepayment?
To reduce your home loan EMI, check out the following tips.
Reduce Home Loan EMI as an Existing Borrower
If you already have a home loan, here are some tactics you can follow
1) Negotiate for Better Terms
Based on your existing relationship with your lender and your repayment track record, you can request for a lower home loan interest rate. This will lower your EMI.2) Refinance your Home LoanCarrying out a balance transfer is a top way to take advantage of lenders offering low interest rates, those willing to extend your home loan tenor, or both. Before the home loan balance transfer, however, do a cost-benefit analysis to verify that your interest savings outweigh the balance transfer costs.3) Make Part-prepaymentsWhen you make a prepayment, you pay a portion of the principal early, bring down the overall outstanding amount, and can reduce the EMI or the tenor.
2) Refinance your Home Loan
When transferring a home loan balance, you can benefit from lower interest rates or longer loan tenors. Before transferring your home loan balance, do a cost-benefit analysis to verify that your interest savings outweigh the balance transfer costs.
3) Make Part-prepayments
Whenever you make a prepayment, you are paying a portion of the principal in advance, which can bring down the overall outstanding amount, and result in lower EMI or reduced tenor.
How to Reduce Home Loan EMI as a New Borrower?
If you are a new borrower, adopt these tactics.
1) Select the Best Lender
Search for a lender offering the lowest interest rate on your home loan and other charges.
2) Pick the Right Loan
When you choose a floating-rate loan, you can take advantage of a lower interest rate when rates fall. BHFL offers repo rate linked interest rates as per internal underwriting policy.
3) Make larger down payment
Lender finance up to 80-90% of the property’s value, leaving a 10-20% down payment to be made by the buyer. However, you should ask yourself, “If I can make a larger down payment, will I reduce my home loan tenure, EMI, or both?” If you can, it is better to do so and reduce your debt.
4) Choose a Long Tenor
When taking out a home loan, you can choose a long tenure to keep monthly installments smaller. To save on interest, however, you have to decide: Can your monthly installments go down a little? The idea is that a smaller tenure translates into paying less interest, even though your monthly installments increase.
5) Go for a step-up/ step-down plan
Aggressive Pay-Effort Scheme (APES) enables you to pay less from the beginning and lower your EMI towards the end of your tenure. This scheme is beneficial for young learners and those hitting retirement, respectively.
So, now you know how to reduce your home loan EMI. Play your cards well to meet your housing and other important goals!