Tips To Reduce Your Home Loan EMI

Introduction

Buying a home is one of the biggest achievements in one's life, whereas a home loan is the most significant liability. But in most cases, people might borrow more than they can afford due to the higher cost of their home loan EMI. If you don't have a well-thought-out plan in place, it could significantly strain your monthly budget. Since home loans can have extended terms of up to 30 years, you must constantly seek ways to reduce your home loan EMI.

Home Loan Hacks to Reduce the EMI Burden

Before you think about reducing your home loan EMI, it would help to consider some key aspects. These crucial facets of a home loan include selecting a lender with the lowest interest rates and confirming that the lender offers you a Marginal Cost of Funds based Lending Rate (MCLR) related interest rates. 

Online Comparison of Interest Rates

The process of home loan comparison is now more efficient than ever, thanks to the internet. You can now find the best home loan interest rates by searching the internet and visiting independent portals or aggregator websites that provide a breakdown of various home loan ROIs, fees, and other costs. Obtaining a home loan is a significant investment, so you should find the most appropriate ROI to reduce your home loan EMI.

Choose a Longer Tenure

Your EMI goes down as the term of your home loan is extended. It is advised that you choose a longer tenure for the loan if you want a lower EMI. But you'll be paying more interest on the balance due. This is an extremely simple way to reduce your home loan EMI but choose it only if you are willing to pay higher interest costs in the long run.

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Save Up For A Significant Down Payment

Home loans are typically only approved for the partial cost of the house. Banks and NBFCs give out home loans for 80% to 90% of the estimated cost of the house. The buyer contributes the final 10% top0% as a down payment. However, you can considerably lower your EMI if you set aside more money than the required down payment. Your home loan EMI amount is directly related to the loan-to-value ratio. Your capacity to make a larger down payment also raises your eligibility for a home loan, improving your chances of getting approved.

Prioritise Component Payments

Regular prepayments will make it possible to lower your liability more quickly. Your house loan could be paid off early with the help of annual bonuses and any income from your other investments. Your EMI, for instance, would be about INR 35,000 if you take a home loan of Rs 40 lakh forp0 years at a rate of 9% annually. You can pay off your loan balance in 15 years rather thanp0 years if you pay INR 35,000 yearly in addition to the EMI. It is one of the lesser-known home loan hacks but is extremely useful in reducing your home loan EMI.

Refinance Or Renegotiate Your Mortgage

You can renegotiate the conditions of your home loan if you have never missed an EMI payment. Lenders frequently lower ROIs for people still paying off their loans. Alternatively, if you learn that another lender is willing to finance your home at a lower ROI, take advantage of it. You can change lenders in the middle of your loan term if you want to lower your EMI. In fact, a home loan balance transfer is one of the best tips to reduce the home loan EMI.

Important Factors to Consider

Buying real estate involves a lot of factors to take into account. The following are two of the most important ones that should be taken into consideration:

• Appreciation: Always estimate a property's future price before investing. The investment makes sense only if the property has the potential for long-term growth.
• Affordability: Purchasing real estate necessitates that you have a steady source of income as well as extra cash. You will require a small sum of money for the down payment, upkeep, and upcoming renovations. Therefore, ensure you only buy a house when you can afford it.

=> Read Also:- Importance of Quality in Real Estate

Conclusion

Use trustworthy home loan calculators to calculate your EMI payments before choosing a home loan. Doing research is crucial if you require a home loan to invest in real estate. You must evaluate various lenders using criteria such as their house loan interest rates, tenure flexibility, added advantages, testimonials, and other factors. Always use the most reputable lenders when applying for a home loan. While you are at it, visit Adani Realty, where you can find many affordable and luxurious properties.