Best Ways to Save Money on your Home Loan

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Home Loan

Turn your dream home into a reality with the best home loan India. Amid the skyrocketing costs of owning a home, you can apply home loan online and simplify the process. You can borrow money from a bank and then pay it back in monthly instalments on a home loan. However, there are several technicalities that you must be mindful of so that you save money on your home loan. Don’t be tempted to go with the first lender who comes your way. Consider the following pointers before choosing the best home loan in India.  

What are the Different Types of Home Loans?

You will come across the following two types of home loans:

  •  Fixed-rate: Home loans with a set interest rate that doesn’t change through the tenure. 
  • Variable rate: Home loans that allow mortgage payments to fluctuate slightly in response to changes in the rate of interest. 

With a fixed rate, your payments remain stable over time. However, your overall interest is often higher than with variable-rate loans.

Factors Affecting the Interest Rate of Home Loans

The factors affecting the interest rate offered by a bank or financial institution are as follows:

  • Your credit score
  • Your income level
  • Your age
  • The down payment amount
  • Monetary policies of the funding institution

How to save money with Home Loans?

The following options can help you save money and benefit from the best home loan India. However, the golden rule stays the same, i.e., take the most economical loan possible and ensure that you pay it off as quickly as possible. So, you will be able to save money on interest as you will make monthly payments on a smaller principal balance.  

Part Prepayment

You can make partial payments on the due principal amount along with the monthly EMI. This way, you tend to decrease the interest outgo in the loan tenure.

Using your annual bonuses or any unexpected financial gain for partial prepayments can help you save much money over time, lower your total interest, and get out of debt faster.

Negotiate with the lender

Negotiating is not just limited to a lower interest rate but also an extension on your repayment date. A good relationship with the loan provider can help you negotiate the interest rate and terms better. 

Choose a balance transfer

If negotiation fails and you still get a lower interest rate, you can opt for a balance transfer. Here you get the remaining home loan balance transferred to a new lender. This new lender settles the outstanding payment to your existing lender while you pay the remaining EMIs to the new lender.

However, the process involves a small processing fee. So, you must consider the fee and other charges levied by the new lender before making a decision. You save a considerable amount of money by getting a reduced interest from the new lender. 

Make a big down payment

You can wisely use your available funds and make a big down payment to reduce your interest outgo on the home loan. Suppose you take a home loan of Rs. 50 lakh. It will cost Rs. 62 lakh interest over a 20-year duration if your interest rate is 9.55%. Contrastingly, if you make an Rs. 10 lakh down payment, you will reduce the loan requirement to Rs. 40 lakh and will save Rs. 12 lakh interest value over the 20-year duration. 

Conduct thorough research before taking a loan

Thorough research of the available options while weighing various charges levied by lenders is an essential step. 

It offers a clear picture of what you choose and what others are offering. So, check the individual website of lenders to get more information. 

Increase monthly EMI

Reducing the tenure and increasing the monthly EMIs with an increase in your income helps reduce the overall interest outgo on the best home loan India. So, review your EMIs annually and see if you can increase the EMI amount. 

Avoid additional charges

Tracking your EMI cycle is vital to avoid paying additional charges. The best way is to keep your EMI on auto-debit and maintain the appropriate account balance. It not only saves money but also allows you to maintain a healthy credit score. 

Get the best home loan India with competitive interest rates and zero hidden charges. You can apply home loan online with the institution that suits your choices and save your money following the tips shared above. 

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