By Atul Monga
In today’s housing market, buying your dream house is nearly impossible without a home loan. However, the burden of high interest rates can become daunting for many. Nonetheless, with the right strategies in place, one can substantially alleviate this financial burden and pave the way towards a more convenient repayment journey.
Explained below are five simple steps that can help alleviate the burden of high-interest home loans.
Keep A Regular Check On Home Loan Interest Rates
Home loan interest rates keep fluctuating depending upon regulatory policies and market dynamics. It is advisable to stay vigilant and keep monitoring these loan rates to be able to make the most of favourable conditions. Consider refinancing your loan at a lower interest rate and that can result in considerable savings over the entire loan tenure.
Staying informed about the central bank’s announcements and economic indicators can help you anticipate changes in home loan interest rates, enabling you to make timely decisions about refinancing.
Also Read | What are the minimum balance charges of savings account? HDFC Bank vs ICICI Bank vs PNB vs SBI vs Yes Bank compared
Make Use of An EMI Calculator For Home Loans
Before taking a deep dive into the world of home loans, consider educating yourself about home loans. With the help of EMI calculators, you can easily determine how much of your payments go towards principal versus the interest amount each month. These tools let you estimate your monthly installments based on your loan amount, tenure and interest rate.
Negotiate With The Lenders
Negotiation can significantly impact your home loan terms, so don’t hesitate to negotiate with your lender to secure more favorable conditions. Whether it’s negotiating prepayment penalties, interest rates or even processing fees, every discount eventually adds up to savings in the long term.
Arm yourself with the knowledge about prevailing market conditions regarding home loans, government policies that have been introduced and other such details to leverage competitive offers from lenders you approach. This will also strengthen your bargaining position. Understand that lenders value long-term relationships and in such cases are often willing to accommodate reasonable requests from customers to be able to retain them.
Also Read | Highest Fixed Deposit Rates: Private vs Public sector banks FD interest rates compared – check list
Ensure You Make Regular Payments
Did you know that the EMIs paid by you, in the beginning go towards the interest levied on your original home loan amount? This implies that regular pre-payments during the initial years of the home loan can help you considerably cut down on the home loan interest. If you receive a bonus or have an additional source of income, consider using it for home loan pre-payments. This is one of the most effective ways to reduce your home loan interest. Additionally, with a floating home loan interest rate, your lender is likely to waive any prepayment fees.
Choose a Shorter Loan Tenure
A longer loan tenure might seem attractive due to lower EMIs, but it ultimately leads to higher interest payments over time. On the other hand, choosing a shorter loan tenure can reduce the overall interest burden, although it results in higher EMIs. It’s important to assess your financial situation and balance interest savings with affordability. Remember, a shorter loan tenure not only accelerates debt repayment but also allows you to achieve a debt-free life sooner.
Also Read | Small Savings Schemes: 6 new rules from October 1 for PPF, NSS, Sukanya Samriddhi Yojana & other schemes – check details
The Final Word
Owning a home is a cherished dream that reflects your personality, but it often requires financial assistance. Being financially prudent is crucial when taking out a home loan. To mitigate the burden of high-interest loans, it’s essential to conduct thorough due diligence and make informed choices.
(The author is CEO & Co-Founder, BASIC Home Loan)
In today’s housing market, buying your dream house is nearly impossible without a home loan. However, the burden of high interest rates can become daunting for many. Nonetheless, with the right strategies in place, one can substantially alleviate this financial burden and pave the way towards a more convenient repayment journey.
Explained below are five simple steps that can help alleviate the burden of high-interest home loans.
Keep A Regular Check On Home Loan Interest Rates
Home loan interest rates keep fluctuating depending upon regulatory policies and market dynamics. It is advisable to stay vigilant and keep monitoring these loan rates to be able to make the most of favourable conditions. Consider refinancing your loan at a lower interest rate and that can result in considerable savings over the entire loan tenure.
Staying informed about the central bank’s announcements and economic indicators can help you anticipate changes in home loan interest rates, enabling you to make timely decisions about refinancing.
Also Read | What are the minimum balance charges of savings account? HDFC Bank vs ICICI Bank vs PNB vs SBI vs Yes Bank compared
Make Use of An EMI Calculator For Home Loans
Before taking a deep dive into the world of home loans, consider educating yourself about home loans. With the help of EMI calculators, you can easily determine how much of your payments go towards principal versus the interest amount each month. These tools let you estimate your monthly installments based on your loan amount, tenure and interest rate.
Negotiate With The Lenders
Negotiation can significantly impact your home loan terms, so don’t hesitate to negotiate with your lender to secure more favorable conditions. Whether it’s negotiating prepayment penalties, interest rates or even processing fees, every discount eventually adds up to savings in the long term.
Arm yourself with the knowledge about prevailing market conditions regarding home loans, government policies that have been introduced and other such details to leverage competitive offers from lenders you approach. This will also strengthen your bargaining position. Understand that lenders value long-term relationships and in such cases are often willing to accommodate reasonable requests from customers to be able to retain them.
Also Read | Highest Fixed Deposit Rates: Private vs Public sector banks FD interest rates compared – check list
Ensure You Make Regular Payments
Did you know that the EMIs paid by you, in the beginning go towards the interest levied on your original home loan amount? This implies that regular pre-payments during the initial years of the home loan can help you considerably cut down on the home loan interest. If you receive a bonus or have an additional source of income, consider using it for home loan pre-payments. This is one of the most effective ways to reduce your home loan interest. Additionally, with a floating home loan interest rate, your lender is likely to waive any prepayment fees.
Choose a Shorter Loan Tenure
A longer loan tenure might seem attractive due to lower EMIs, but it ultimately leads to higher interest payments over time. On the other hand, choosing a shorter loan tenure can reduce the overall interest burden, although it results in higher EMIs. It’s important to assess your financial situation and balance interest savings with affordability. Remember, a shorter loan tenure not only accelerates debt repayment but also allows you to achieve a debt-free life sooner.
Also Read | Small Savings Schemes: 6 new rules from October 1 for PPF, NSS, Sukanya Samriddhi Yojana & other schemes – check details
The Final Word
Owning a home is a cherished dream that reflects your personality, but it often requires financial assistance. Being financially prudent is crucial when taking out a home loan. To mitigate the burden of high-interest loans, it’s essential to conduct thorough due diligence and make informed choices.
(The author is CEO & Co-Founder, BASIC Home Loan)