Home loans have become a necessity. To own a home of one’s dream that can house every need and comfort of one’s family requires extensive planning. It is essential to know how to manage the monthly EMIs so that one can save up and not pay more against their loan.
There are some essential tips that one can integrate with their home loan plan to reduce their interest rate. With the help of these tips, you can ensure that you save up on the EMIs of your home loan.
Tips to Save up on the EMIs of your Home Loan:
In the initial years of the tenure of the home loan, you are paying up the interest more than the principal. Evaluate whether you can pay the monthly payments frequently through prepayments. Not only will you be reducing the principal amount of your loan, but you will also be saving up by having to pay a lesser interest rate. Though, before opting for the choice, ensure that your loan provider does not charge you extra for prepayments. Home loan providers such as PNB Housing Finance Ltd do not charge any fee against prepayments.
- Home Loan Transfer
While making prepayments, if you notice that you cannot make a considerable difference in the principal amount, then you should check the interest rate. If the interest rate is much higher, then you can opt for a home loan transfer to another loan provider. Make sure that you do the research and compare the terms and conditions of each home loan provider. Also, note that the penalty charged will be much higher if you miss a payment on a transferred home loan.
The safest option to ensure that you do not end up paying too much interest for your home loan is to select a shorter tenure for your home loan. A longer tenure, say for 25 to 30 years, will result in smaller EMIs which are computed with a higher interest rate. For a tenure of say, 10 years, the principal amount will be divided into bigger EMIs but the interest added will be much less.
- Down Payment
You can choose to pay a bigger down payment against your home loan. If a huge percent of your principal amount has already been paid through a down payment, then the amount at which interest will be applicable will decrease significantly. Thus, you will not have to pay higher EMIs to the loan provider. A home loan EMI calculator can help you determine the down payment that will result in the lowest interest rate.
While you are signing up for a home loan, consider a plan that will higher EMIs. You can also increase the amount of your EMIs as you progress with your business or get a raise in your job. By increasing the amount of EMIs paid monthly, you are decreasing the tenure of the home loan, thereby decreasing the interest rate to be paid against the loan.
When getting a home loan, it is always better to study your financial condition and choose the provider that provides flexibility throughout the plan. You should have the option to change your home loan plan so that you can ease the pressure on yourself quicker. Use the home loan EMI calculator by PNB Housing Finance Ltd before you sign up for a plan to make sure you are making a well-planned decision.