Considering the steep prices of homes in India, most people are left with little choice but to apply for housing loans if they want to own their dream house. However, understanding EMIs (equated monthly instalments) that come with home loans can be tricky.
To make it easier for yourself, it is a good idea to research and plan repayments even before you apply for home loan.
However, if you struggle to manage your home loan repayments, don’t worry! There are many ways to bring down the EMI and make owning a home more affordable.
This article will give some insider tips on how to cut down the home loan EMI.
Important Checkpoints Before You Apply For Home Loan
- Get your documents in order. This includes income tax returns, bank statements, and other financial documents.
- Know your credit score. This will give you a good idea of the interest rate you’ll be offered.
- Decide on the loan amount and tenure. The higher the amount you opt for, the more the EMI. Choose a term that you’re comfortable with repaying.
- Compare interest rates and other loan-related fees from different lenders. Look for a lender with a competitive interest rate and reasonable fees.
- Consider a longer tenure. A longer tenure will mean lower EMIs, but you’ll pay more interest.
6 Best Solutions to Bring Down Loan EMI
Only keeping home loan documentation in place is not enough. A borrower has to look at multiple things when applying for a home loan as it will reduce the EMI burden and make home loan repayments easy.
Here, we have provided six solutions that can bring down home loan EMI and interest rates.
Choose The Right
Choosing the right property is pretty important in bringing down monthly EMIs. Before applying for a home loan, check the risk involved with the property and the builder’s reputation.
There are some properties that are on the negative list due to locality or poor reputation of the builder. For the high risk and negative properties, the monthly EMIs automatically rise.
Make Sure Your CIBIL Score is Good
Maintaining an excellent CIBIL score is important for several reasons.
A high credit score indicates you as a low-risk borrower, which could help finalise better terms and rates on loans. It also makes it easier to take out other types of financing in the future because lenders show confidence in your ability to repay their money.
At PNB Housing, you can apply for a home loan with a CIBIL score of 611 or more.
Choose Home Loans With Good Interest Rate
One of the most important things you can do when taking out a home loan is to choose a home loan with an interest rate that is not too high.
The reason is that a longer-term home loan with more than 8% interest will dig a hole in your pocket over time. All the savings and hard-earned money will go into payment of loan interest.
Yu can avail of a loan at institutions like PNB Housing, where home loans can be availed at 7.99% per annum for self-employed and salaried individuals.
Choose Repayment Tenure Wisely
When applying for home loans, one essential aspect is choosing the right repayment tenure.
A longer term might mean lower EMIs, but it also means paying more interest overall. On the other hand, short tenure will help you save on interest, but your EMIs will be higher.
The best way of deciding whether to take long or short tenure is to look at your current income and expenditure and see how much you can comfortably afford to pay each month.
If you’re already stretched thin, it might be worth considering a longer tenure so that you don’t default on your loan.
Use Online Tools
Make use of online tools like home loan calculators to get a clear picture of your current situation.
This will help you identify where to make changes to lower your payments.
Pay Large Down Payment
Paying a large down payment is one of the most effective ways to reduce your home loan EMI. Doing so reduces the principal amount on which interest is calculated, which means you will have to pay less interest throughout your loan tenure.
Moreover, it also means you can get your loan approved more quickly.
The basic thumb rule is to pay a minimum of 20% as a down payment that will lower the EMIs and overall interest. But if you increase the down payment further up, your EMI will proportionately drop!
Home loans can be tricky to figure out, but following the tips discussed above will help bring down your monthly payments. Having a lender like PNB Housing by your side will take off the burden of monthly EMIs from your shoulders.
The low and competitive interest rates offered will help save hard-earned money in the long run.