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Home Articles Ways to Reduce Your Home Loan EMIs by the Experts of IndianMoney.com

Ways to Reduce Your Home Loan EMIs by the Experts of IndianMoney.com

IndianMoney.com Research Team | Updated On Friday, September 13,2019, 05:11 PM

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Ways to Reduce Your Home Loan EMIs by the Experts of IndianMoney.com

 

 

Why do I need to own a home? Have you ever asked this question to yourself? In no, ask this question to yourself. Most people dream of owning a home, but they never try making it to happen. One of the experts from IndianMoney.com says that owning a home makes a huge difference in the financial future of an individual. Homeownership gives you several benefits and enables you to buildwealth. If you buy a house worth Rs. 60 lakh today in a prime locality, do you think the market price does not increase over a period of time, say after 4-5 years? It will.

If you have decided to buy a home, obtain a home loan to accomplish your long-term goal. Buying a home is a big financial commitment. For example, a home loan taken for a term of 20 years requires you to pay its EMIs interruptedly until the maturity date. When you commit financially for a longer tenure, you must be well-prepared. The best thing you can do is to keep your home loan EMIs as low as possible. How? The financial experts at IndianMoney.com recommend the following tips for first-time home loan buyers to lower their EMIs.

Want to know more on Home Loans? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

Compare Home Loan Rates Online

The home loan market is huge in India. Most public and private sector lenders provide home loans today. There exists a healthy competition in the industry. For both potential and existing customers, they keep introducing attractive offers. Try comparing home loan interest rates online to find the best deal for you.Just visit the official website of the lenders of your choice. You can also visit the online portals that give you a list of banks offering home loans with interest rates. In the end, choose the one that has a lower rate of return. Of course, a home loan with a lower interest rate will reduce your home loan EMIs.

Go for a Longer Repayment Term

Go for a longer repayment term if you are expecting your home loan EMIs to be as low as possible. On the other hand, a shorter loan term will maximize your EMIs. The experts say that a short-term loan term is a good choice if you can afford to pay higher EMIs, which will minimize the interest payment. It all depends on your debt repayment capabilities.They further say that people should make use of the home loan calculator available on the official website of IndianMoney.com to lowertheir EMIs. The calculator is easy to use. https://indianmoney.com/calculators/home-loan-emi-calculator

  1. If you are willing to avail a home loan of Rs.50 lakh for a term of 10 years at an interest rate of 10.5%, the monthly home loan works out to be Rs.67,467.
  2. If you are willing to avail a home loan of Rs.50 lakh for a term of 15 years at an interest rate of 10.5%, the monthly EMI comes up to Rs.55,270 .
  3. If you are willing to avail a home loan of Rs.50 lakh for a term of 18 years at an interest rate of 10.5%, the monthly home loan works out to be Rs.51,611.

See Also: Repo Linked Home Loans: Your Home Loan Rate Will Go Down

The lowest EMI, in this case, is Rs.51,611.

Make Downpayment as Much as You Can

Lenders finance up to 80-90% of the market price of the property under consideration. For example, if the market price of the property is Rs.50 lakh, the bank finances up to Rs.40 lakh (80% of Rs.50 lakh) or up to Rs.45 lakh (90% of Rs.50 lakh). The remaining is the downpayment.In lieu of just paying the minimum downpayment, which is 10 or 20%, try paying as much as you can. But, while trying to pay a bigger downpayment, be sure not to overstretch your finances. A bigger downpayment will reduce your LTV ratio. A lower LTV ratio will increase the chances of loan approval.

How Can Existing Home Loan Buyers Minimize Their Home Loan EMIs?

At IndianMoney.com, the experts believe that the existing home loan customers should refinance their loans, negotiate the service terms with the existing bank and make loan prepayments if possible. These are the best strategies. Customers always have an option to refinance the loans. It means that they can switch the lender to benefit from the competition. The loyal customers can negotiate the service terms with their bank to avail lower interest rates. It is possible. Make prepayments when you have a surplus corpus. Prepayments will definitely reduce the burden of paying higher interests.

How to Get Home Loans with a Poor Credit Score?

There is a good news for people who are not able to get home loans because of their poor credit score. The government is contemplating to introduce an exclusive fund, which will support people with a poor credit score to avail such loans. This fund acts as a guarantor and requires borrowers to pay a minimal fee. The people working in the unorganized sector can make use of this initiative. The government hopes that the credit enhancement fund may bring many home loan customers into the home loan market in India.

Factors Impacting Your Home Loan EMIs

The home loan EMI is impacted by the principal amount, the rate of interest and the loan tenure. The principal is the actual loan amount. The lower the principal, the lower is the EMI and vice versa. The rate of interest is the rate at which the bank has sanctioned you the loan. The tenure or term is the time within which the loan has to be repaid. These are the simple things to understand and a part of every home loan offered today.

Takeaway

Home loans have made our life easier. They are of two categories: 1) fixed rate home loans and 2) variable rate home loans. One should understand the difference between these two before buying. The first-time home loan buyers must follow the tips discussed in this article to save on home loan interest rates.

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The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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