Tips to Reduce Home Loan Interest Rate

Everyone aspires to buy their dream home one day and its usually one of the most expensive ventures they ever make. Traditionally, a home loan is availed to pay for a larger chunk of the final cost. However, before taking a home loan, a number of factors need to be considered very carefully as this would have an impact on your monthly running expenses too.

Home loans are repaid back to the loaner bank in the form of EMIs (equated monthly instalments) that can stretch out to a maximum of 30 years depending on your income and repaying ability. A well-managed home loan can make all the difference between an achievable goal or a possible loss of your home. Since home loans come with impactful interest rates, you need to first look around for a bank that is reliable and offers decent interest rates. High interest rates mean more EMIs paid out. Availing of home loans also gives you a bouquet of tax benefits which are beneficial in the long run.

Some of the factors to keep in mind while applying for a home loan are your eligibility depending on your income, repayment capacity, CIBIL score and cost of home loan including administration fee, processing fee, prepayment fee, etc. To avoid putting stress on your monthly budget, you need to plan out your home loan carefully. Here is a look at some tips to help reduce your payable home loan interest rate:

Research Online

Before settling on a loaner bank, research online for the best interest loans offered by standard banks or NBFCs. Even a variation of 0.5% in interest rate can make a significant impact on the total cost of your home. There are some websites that can give you greater clarity with a comparative study of different loaner banks.

Larger Down Payment

Most banks require you to make a down payment of anything between 10-20% of the total value of your home while they provide the remaining 80-90% of the financing. However, if you make a larger down payment, you will have to take a smaller loan amount. This way, you will end up paying lower on interests too.

Shorter Loan Tenure

When taking a loan, choose a shorter loan repayment tenure. This will ensure that your overall interest payable comes down significantly. You will end up paying more interest if you go for longer tenures of 25-30 years. Going with shorter of 10-15 years will mean larger EMIs, but lower interests paid out.

Prepayment

Another smart way of bringing down the total interest paid is by making frequent prepayments, especially during the early years of your home loan. Bringing down the principal amount borrowed means lower paid on a larger sum, hence prepayments make a good option. Do note that floating rate loans do not incur extra charges on prepayments, unlike fixed interest rates which attract a certain percentage.

CIBIL Score

If you have been a responsible borrower and have a good credit history and a CIBIL score above 700, you have higher chances of being offered lowered interest rates on your home loan. Aside from that, you can also wait for festive deals when rates might be lower to apply for a home loan.

Heavier EMIs

Some banks allow borrowers to revise their EMIs. So, in case you have had a promotion and have more income to spare for your monthly installments, increasing your EMI amounts would result in shorter tenures and less total interest paid out; this is because your loan amount would come down significantly. Do check with your bank if they offer this facility.

With interest rates on home loans at an all-time low, this is the best time to take a home loan and buy a home. For those on the lookout to buy flats in Thrissur, you must check out the delightful apartments and villa projects offered by Vishraam builders. Having been in the business of building quality homes for over 21 years and with the dedicated experience of 44+ projects, Vishraam builders have over 2000 happy customers to vouch for their homes! Each project is built responsibly with minimal cost to the environment, and comes with green living features, aside from a plethora of lifestyle-enhancing amenities.

Come have a look at any of our projects today, and you will surely fall in love with them!