Want to Reduce Your Housing Loan EMIs? Know How You Can Do So!

India has a massive market for affordable real-estate. A growing influx of population from various parts of the country to her metropolitan areas has fuelled the need for rapid development of the semi-urban and urban real estate.

This necessity for residential units has also driven the demand for financial products, like home loans. These are customized credits provided by lenders to help individuals purchase residential properties on credit.

A quick look into the home loan market in India –

• 18.6% growth in home loans until April 2019 over the previous 14.9% per annum.
• Rs. 11.6 trillion worth funds disbursed as home loans across the nation.
• Rs. 2 Lakh Crore spent on government-funds to provide affordable housing.

Flexible repayment tenor, substantial loan amounts, and affordable home loan interest rates have further helped increase the practicality of availing such a loan to pay for residential units.

Borrowers can also follow several methods to reduce their home loan EMI calculator, allowing them to save a substantial amount during the repayment tenor.

Ways to reduce home loan EMIs –

Opt for a home loan balance transfer

A home loan balance transfer is a facility via which a borrower can shift his/her existing home loan to another lender offering lower home loan interest rates.

Applicable interest rates on a home loan or any loan are relative to the prevalent market lending rate. Currently, the MCLR stands as an index to determine the minimum rate of interest at which a financial institution can lend money to the borrower.

Lenders add a certain percentage over the MCLR, known as the spread. Borrowers are liable to pay interest as per the lending rate and the spread added on it by that specific lender.

Home loan interest rates, and interest rates on all other loans, vary with revisions to the MCLR. Considering the long tenors of home loans, you may find lower rates of interest available in the market while you are paying a higher rate of interest on your existing home loan.

Furthermore, if you have availed a home loan before 2016, there is a high chance that you are charged interest rates according to the old metrics. You can use the balance transfer facility to shift your debt to a new lender offering an MCLR-based rate instead.

A home loan transfer is one of the best ways to enjoy lower rates of interest on your existing home loan.

Part Prepayment

If you have excess funds in hand, you can opt for prepayments to the total interest you are liable to pay. Any amount of funds you pay towards the loan repayment over and above a single EMI is considered as a prepayment or part prepayment.

When you credit an amount towards the outstanding loan amount more than a single EMI, the difference repays the current principal amount. Thus, you end up reducing the total principal you are yet to repay.

If you plan to prepay your loan to reduce the overall loan burden you can opt for lenders such as Bajaj Finserv who offer Home Loans with no-charge part prepayment and foreclosure facilities. You can even avail subsidized loans via Government-backed schemes like Pradhan Mantri Awas Yojana with interest rates as low as 6.93% per annum, and save up to Rs. 2.67 Lakh during loan repayment.

Know how to close a home loan effectively; foreclosure can help you save even more on the liable interest rates.

Other ways to reduce Home Loan EMIs –

• Avail the loan or shift to floating interest rates to take advantage of lower market lending rates.
• Opt for a longer repayment tenor.

Home loans have become one of the most viable methods to procure residential properties in today’s fast-growing Indian economy. With the above-mentioned methods to lower EMIs, prospective buyers can easily purchase a resident of their own and save a significant amount throughout the loan tenor. Know why this is the perfect time to buy your dream home and apply for a home loan with a reputed lender.