Ways To Reduce Interest Rate on Your Home Loans
So you have finally found your new home! So far so good. Finding the proper home loan is the next on your mind. Interest rate is one among the first concerns when finalizing a home loan. There has been a great reduction in the interest rates recently. A little difference in the interest rates offered will make an excellent difference for you since it’s a huge investment.
Let us throw light on some of these smart ways which can assist you pay lesser interest rates on your home loans.
Shorter Home Loan Duration
Although, going for a shorter duration will increase the EMI amount, this may certainly make sure that your principal amount is paid off much earlier. Moreover, since interest rates are actually calculated on principal amount, payment of principal amount earlier will further assist in marginal reduction of absolute interest to be paid.
Pay Extra EMIs
It may really seem to be a little difficult, however try paying extra EMIs if you actually want your loan to be clear earlier than you expected. Paying EMIs with extra amount will further help in reduction of your principal amount and thus the interest in turn.
Pay Off Extra Annually
Once you are appraised annually by your company, increase the amount you pay EMIs for your home loan as well. Furthermore, this will reduce the principal amount and ofcourse the interest on your loan.
Get Your Home Loan Refinanced
Furthermore, keep an eye on the rate of interests prevailing in the market. You may come across loans with lower rate of interests offered to you by the current lender. This is when you can switch to another bank for home loan. However, before actually switching to another lender, you must thoroughly 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
Shift to marginal cost of Funds which is Based on Lending Rate
Since May 2016, all banks have actually shifted to MCLR or marginal cost of funds based lending rate from base rate. In addition, this step was taken to actually help borrowers benefit from any change in home loan interest rate.
While applying for any loan that provides low interest rates, please ensure you zero in on a loan that matches your monthly budget.