How can you reduce your home loan EMI burden?

The home loan is one of the significant liabilities for the borrower to repay the installments on time. The complete payment of the loan and the principal & the interest amount and the clearance of the full & final settlement of the loans can help gain permanent ownership of the property. The borrower can get the property wholly transferred in his/her name. As the house’s purchase is an essential factor in every individual’s life, opting for home loans and a home loan’s approval is also a crucial factor in property purchase decision-making. The borrower needs to have an adequate amount of funds to repay the installments on time. The income of the borrower should be in a running stage to avail the loans from the lenders. The borrower needs to submit the necessary documents like proof of income/ proof of employment, government identity proof, CIBIL score statement, application form duly signed after reading all the terms & conditions of the loan agreement.

The borrower is charged interest rates on a cumulative basis on the loan repayment, which means that on a cumulative basis, the interest repayment of the loan is relatively high against the actual amount being mortgaged by the lender. Thus, the borrower needs to use some tricks & strategies to save money on interest repayment and become debt-free as early as possible. The lending rates being charged by the lender depends on various factors like the age of the applicant, nature of work of the applicant, the credit score of the applicant, type of loan opted for like floating interest rates or fixed interest rates, tenure of the loan, amount for which the borrower has applied for the loan, the income of the borrower depending on which credit can be extended to the borrower. Etc In case of a default, the borrower can be charged a hefty amount of penalty for the delay of repayment of the loans. The borrower should check with the various financial institutions for the banks’ competitive interest rates, wherein the borrower can have multiple choices to opt for the loans.

Tips to reduce the home loan EMI burden:

Avail lower amount of loans & try for maximum down-payment:

The borrower should try to make the maximum amount of down payment while purchasing the property. Suppose there is a lower amount of loans being opted by the borrower. In that case, it becomes easy for the borrower to repay the loans on time as the liability of the loans is less, and due to the lesser amount liable for the repayment, the borrower can pay the installments quickly, thus becoming debt-free in an early stage. The loans opted for a lesser amount can meet better eligibility of the loans to be borrowed by the lender as the income eligibility criteria also decreases for the lender to avail loans. In the case of lower-income, the borrower can also avail the shorter loans, while for the more significant amount, the borrower’s income criteria also decrease.

Try maintaining a good CIBIL score:

The borrower tries to maintain the excellent CIBIL score; he/she can avail lower interest credit on the loans being applied. Against the lower CIBIL score, the borrower may be charged higher interest rates. The applicants who pay the installments on time-related to the loans, or else the credit card bills are amongst the high value preferred customers to the bank. Thus the bank does not wish to lose business from the honest creditors and can charge lower interest rates to the creditors.

Avail of the loans at an early age:

The borrower should opt for loans at an early age in order to get a higher moratorium for the repayment of loans being applied. The borrower, thus having a higher duration of years remaining for the repayment of loans, can be given preference as the young applicants can have longer productive years been available to repay the installments. The borrower, when can avail the loans for a longer duration, can be charged a lesser percentage of interest rates as compared to the applicants of higher age.

Try early repayment of the loans rather than delaying it:

Earlier, the banks used to charge a higher penalty for early repayment of loans, as the financial institutions expected to keep a higher number of loans running. But because of the increase in the banks’ non-performing assets, the lenders are in a hurry to get the loans cleared up as early as possible. Thus in case of the early repayment of the loans, the banks also offer interest subsidies for the early refund. The borrower can save massive money on interest repayment.

Check for the competitive rates by the lenders:

The borrower can check on various websites regarding the interest rates being charged by different financial institutions’ lenders. The borrowers can thus avail the lender’s loans who charge the lowest interest rates to the borrower. As per the RBI guidelines, the lenders can assess the loans in a particular range only to the borrowers. Still, there is a minor difference in the interest being charged by the different lenders; thus, the borrower can benefit from that and save on interest repayment.

Hence my use of multiple tricks & strategies, the borrower can save massive money on interest credits being charged by the lenders. At competitive rates, which the borrowers can avail, the lenders can save a considerable amount of money on interest repayment. Also, early repayment & opting for a lower amount of loans can help avoid paying a higher amount of interest repayment to the banks.