How to reduce your home loan EMI burden?

The loan repayment is a significant liability on the borrower to keep the get transferred property in their name after the complete installation. If the borrower defaults on loans, then he/she is liable to pay hefty penalties on monthly installments to re-pay the borrowed amount to the bank. Also, the bank’s cibil ratings get reduced in case of the default of payment, while on another side, it may get improved if the borrower re-pays the loan on time. There are multiple ways to reduce bank’s installment by using some simple tricks & strategies. The income tax department also provides tax benefits to the loan borrowers under the income tax act 80C to avail exemption up to a specific limit as prescribed by the income tax department rules & regulations.

The usage of home loans benefits in many ways. As it helps the borrowers buy the dream homes in the early stage of life to opt for loans for a longer duration of time for repayment. It gives a boost to the real estate industry in a better way as real estate companies are a great source of opportunity creators for many employees. The borrowers need to furnish all the necessary documents like income proof, employment proof, bank statement showing sufficient bank balance, investment proof. Etc As per the RBI guidelines, an individual must submit all the necessary documents and the filing of ITR returns to fulfill the loan eligibility criteria.

Following are the ways to reduce the loan EMI:

• Consider pre-paying of the loan:

The borrower, for convenience, can opt for loans of a higher moratorium. Thus, in contrast, if the borrower gets some excess money through financial investments. Sale of any other property, or through any other means through which extra income is generated, the borrower can re-pay higher monthly installment, thus making savings on interest chargeable. More, the earlier the monthly installments are paid, the individual can do more savings. There are very few cases wherein the borrower may be charged a penalty for the early repayment of dues. 

• Take advantage of the EMI waiver option:

The banks may provide discounts or benefits on installments to the borrowers to encourage them, borrowers, to pay EMI on time. In very few cases, borrowers can give a discount or some waiver on interest payments; however, they should take care to avail the discounts. Such schemes are available only on the higher installments being charged.

• Try making a higher down payment and opt for lesser loans:

The borrower should try to make a higher down-payment and pay lower EMI by opting for fewer loans to save money on interest payments. The borrower should try maximizing as many savings as possible. Thus the borrowers can help make the maximum down payment while purchasing the property and opt for lower credit.

• Consider transferring loan to another lender:    

The borrower, while re-paying the existing loan, can transfer the loan to another lender. Thus, after moving the loan to another lender, the borrower can start paying EMI to a new lender by availing loans at a lower interest rate from the new lender, thus saving interest. Therefore the transfer of loans is beneficial as well as recommended to the borrower.

• Don’t hesitate to negotiate the terms & conditions: 

The borrower can negotiate the terms & conditions of the lender’s loans to save money on interest on a 0.50 basis or something lesser than that. The lender can grant an even higher moratorium for loan repayment extension. Hence get a higher duration for repayment as well as lesser monthly installments is liable to be paid.

• Pay higher Emi: 

 After re-paying the installments for a longer duration, the borrower can then re-pay the pending dues faster as the borrower’s monthly income increases gradually after a long period of years, leading to higher income means higher repayment capacity. Thus faster repayment can make the borrower debt-free and help the borrower save money on interest repayment.

Conclusion:    

It is always wise to opt for EMI and save on interest repayment for the loans. The borrower can either make early savings to purchase the property & opt for the lower credits to buy the own property. The borrowers can negotiate the terms, make higher repayments, .etc. Also, good CIBIL ratings can help borrowers opt for loans at a lower interest rate.