Applying for a Home Loan can help you finance your dream home and make you a proud homeowner. While this can be exciting, it is challenging financially. Purchasing your dream home using a Home Loan comes with the responsibility of repaying it. Consequently, a large chunk of your earnings every month is typically dedicated to paying the equated monthly instalments.
However, there are several strategies you can use to reduce this burden of your Home Loan EMIs. Here are a few of them:
Make a larger down payment
When you pay a substantial amount as a down payment, it reduces your Home Loan EMIs considerably. It decreases the principal amount you need to borrow. This makes your EMIs more manageable.
Maintain a decent credit score
Your credit score is an important factor when applying for a Home Loan. Usually, a higher score leads to your bank trusting you more. So, maintain a high score before you apply. Once you have a decent score, your bank offers a Home Loan at an affordable interest rate. You can also provide income proof and maintain a good relationship with your bank. This helps you get a better offer.
Opt for longer tenures
The repayment tenure of Home Loans affects your EMIs. When you choose a longer tenure, you lower your EMIs. This is because the number of instalments becomes higher. However, with a longer tenure, the overall interest you pay on Home Loans increases. Conversely, picking a shorter tenure can result in higher EMIs. However, it reduces the overall interest you need to pay.
Compare different banks
Today, numerous banks offer Home Loans at competitive rates. Research and compare offers from different banks. You can also use a free online tool like a Home Loan calculator to compute the EMIs of different Home Loans from various lenders. This lets you choose a Loan that matches your budget.
Check the processing fees and other hidden terms associated with the Loan, which increases the cost of borrowing.
Pay extra whenever possible
Some banks let you make prepayments whenever you can. This helps you pay off your Home Loan faster. It also lets you pay less overall. However, check if the bank charges a fee for making prepayments.
Try a balance transfer
When you move your Home Loan to another bank that offers a lower interest on the Loan, it reduces your EMIs. However, before you pick a new lender, compare different lenders. You should also determine the costs associated with such a move with the amount you save.
Conclusion
By following these easy tips, you can make your Home Loan EMIs more manageable. These could also assist you in saving money in the long run.