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Follow These Steps To Reduce Your Home Loan EMI Burden
Over the last few years, home loans have become far more feasible than ever. Be it low interest rates or online application processes, they’re within reach for all – in terms of both affordability and accessibility.
While this ease of access incentives borrowing, repayment and managing EMIs efficiently remain crucial for financial health when it comes to a high-value home loan. This is why loan planning is an important step of the borrowing process.
Besides ensuring that you secure a cost-effective deal, effective loan planning helps you reduce home loan EMI before you borrow. Thankfully, you can also take measures to adjust your home loan EMIs during repayment, if necessary. Knowing how to set up and maintain optimal EMI outgo is crucial to all borrowers as it eliminates, or at least reduces, the possibility of defaulting on payments. To know about a few reliable ways to reduce home loan EMI burden, read on.
Make a higher down payment on the home loan
Among the most effective ways to reduce your home loan EMI is make a higher down payment. The EMI amount is calculated based on the - principal and by making a larger down payment, you are borrowing a lower amount. Naturally, this decreases the total interest payable and results in a lower EMI amount. Additionally, by making a larger down payment, you lower the risk incurred by the lender and you may be able to secure a more affordable interest rate.
Secure a better interest rate with a female co-applicant
The EMI amount also depends on the interest rate offered to you. If you secure a lower rate, your EMI amount automatically decreases for the same tenor. So, if you’re set on repaying your home loan in 20 years and want to reduce your EMI burden, apply with a female co-applicant. Lenders usually offer concessional rates for female applicants and by applying with your wife-, you can secure these rates.
Pick a tenor based on your EMI affordability
The best way to reduce home loan EMI burden is to pick the right EMI amount right from the first payment. This can be easily achieved by picking the right tenor. Ideally, you should identify the best tenor for your finances before you apply for a home loan. You can do this using the EMI calculator as it clearly highlights the EMI payable for a given tenor.
The key thing to keep in mind is that a short tenor increases the EMI amount, whereas a long tenor decreases the amount. However, your interest outflow is higher in the case of a longer tenor.
Thankfully, home loans in India generally come with a tenor that range between 10 and 30 years. Some lenders even offer a flexible tenor and you can use this to your advantage by picking the perfect repayment window. When choosing the EMI amount, consider your monthly budget and ensure it doesn’t spill over into your other obligations. If the EMI is too high, increase the tenor until it is at an amount that you can comfortably repay.
Negotiate with the lender for a lower home loan interest rate
You can negotiate with the lender for a lower rate before you avail of the sanction or even during repayment. In case of the latter, you will have to wait for the loan reset period, which is when the lender will review the terms on the loan and adjust them based on the prevailing market rates. At this stage, you can negotiate for a better rate, if you have maintained a good relationship with the lender and have a clear repayment track record.
Refinance your loan with the balance transfer facility
Refinancing your home loan is also a smart way to reduce the home loan EMI amount. In this case, you transfer your existing debt to a new lender with more suitable terms. Refinancing can be a good way to get more manageable EMIs, especially if done early in the tenor.
Keep all these pointers in mind to ensure home loan repayment is never a problem. Another effective way to guarantee this is to opt for the Bajaj Housing Finance Home Loan. This loan offers a sizable sanction, an attractive interest rate, and a flexible tenor that ranges up to 30 years, ensuring comfortable repayment all through. To avail of all the benefits on offer, apply online by sharing basic details.
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