Ways To Reduce Rate Of Interest On Your Home Loans
So you have finally found your new home! So far so good…
Finding the correct home loan is the next on your mind. Interest rate is one among the primary concerns when finalizing a home loan.
Quite recently, there has been a reduction in the interest rates. A little difference within the interest rates offered will make a great difference for you since it’s an enormous investment.
Let us throw light on a number of these smart ways that can assist you pay lesser interest rates on your home loans.
1. Shorter Home Loan Duration
Although, going for a shorter duration will increase the EMI amount, this’ll certainly make sure that your principal amount is paid off much earlier. Since, interest rates are actually calculated on principal amount, payment of principal amount earlier will further help in marginal reduction of absolute interest to be paid as well.
2. Pay Extra EMIs
Well, it may actually seem to be a little difficult, but try paying extra EMIs if you actually want your loan to be clear sooner than you expected. Paying EMIs with extra amount will even help in reduction of your principal amount and thus the interest in turn.
3. Pay Off Extra Annually
Once you’re appraised annually by your company, increase the amount you pay EMIs for your home loan as well. Moreover, this will reduce the principal amount and of course the interest on your loan.
4. Get Your Home Loan Refinanced
Keep a watch on the interest rates prevailing within the market. You may encounter loans with lower interest rates offered to you by the current lender. This is when you can switch to a different bank for home loan. However, before switching to a different lender, you need to check all the terms and conditions attached to it. Make sure that savings accrued from a lower rate of interest aren’t lower than the price of switching to a housing loan provider, with lower interest rate
5. All Banks Shift to marginal cost of Funds Based Lending Rate
All banks shifted to MCLR or marginal cost of funds based lending rate from base rate, since May 2016. This step was taken to assist borrowers benefit from any change in home loan interest rate.
While applying for any loan that actually offers low interest rates, please ensure you zero in on a loan that matches your monthly budget.
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