5 Ways to Ease the Burden of Rising Interest Rates on Your Home Loan EMI

In modern times, Home Loans have played a crucial role in fulfilling this dream of many and making buying homes more approachable. But with Home Loans come monthly repayments called as EMIs. Considering the growing Home Loan Interest rate, EMIs usually take away a great deal of your monthly income and every penny saved is worth the effort. Hence it is always wise to find out ways to reduce it or make it easier. Here are 5 ways in which you can reduce your EMI outgo.

1. Go for the shortest possible tenor

Home Loan tenor is one of the components in the formula of EMI calculation that determines your total interest outgo. Since it is inversely proportional to the EMI, a shorter tenor leads to a higher EMI amount. Likewise, a longer tenor spreads the amount into more years, thereby reducing your monthly payments. Note that while shorter tenor means paying a high EMI amount, it also reduces the total interest outgo from your repayment, effectively saving you a lot of money. You can bypass the complex mathematics involved in EMI calculation by simply using a Home Loan EMI calculator tool available online.

2. Make a higher down payment

Down payment is the money you pay upfront while the rest becomes your loan amount. The maximum loan lenders lend is around 75% to 90% of the value of your Home. This amount may vary between lenders and is dependent on various other variables. But a rule of thumb is based on simple maths - keep the down payment high, so that you borrow less and eventually pay lesser EMIs.

3. Research until you find the best deal

The best part of the Indian culture is the festivals and the festive offers that come with them. When you opt for a home loan, plan your purchase to coincide with a major Indian festival like Diwali, Dussehra, Eid or Christmas. You will usually find a decent dip in the interest rate during this season. A discount of even 10 BPS in the rate of interest can compound into great savings in the future.

4. Make Prepayments

As a borrower, you can reduce the effect of Home Loan interest using a powerful tool called Prepayment. It is a facility whereby a borrower can repay their loan before their actual tenor as per the loan documents. This prepayment can be done in parts or in full. Since your amount due to the lender is reduced early, the effective interest paid becomes less and you become debt free earlier.

5. Opt for a Balance Transfer

A Home Loan Balance Transfer is a powerful tool that can help you bag a better deal like a lower interest rate or better loan terms with another lender and consequently reduce your Home Loan EMIs. Not just that, with a new lender you may also find other supplementary deals such as a Top-up Loan to club with your Home Loan and fund other needs. One point to note however is that balance transfer may involve making some one-time payments such as processing fees and other charges. So, make sure that it is indeed worth transferring your loan to another bank.

With the advice of experts, you can gain some insights on how you can lower your home loan interest rate. Having said that, there are various other components and variables involved in obtaining a lower housing loan interest rate. Each lender has a different option to lower your interest rate, we strongly reckon you try us.