Buying a house is totally a new experience. Wherein, the joy of owning a house cannot be obtained from anything else. However, you might not experience the same while repaying your Home Loans. At times, the loan process can be too long and exhausting. The most common problem faced by many people while repaying a loan is the high-interest rate.
We all know that interest rate plays a very important role in Home Loans, as the interest amount that you pay over your loan decides your debt repayments. Although the real estate rates are constantly rising, there are many new investors approaching the real estate market. One of the reasons for this can be the cut down of repo rates by Reserve Bank of India (RBI). After this major step taken by RBI, Home Loans have seemed to be economical. Despite this, some people might still face problem managing their Home Loans.
Talking about Home Loan interest rates, there are two factor that determines your interest amount: the amount that you borrow and the loan tenor. Depending upon the loan amount that you borrow and the tenor that you choose, the lender calculates your Home Loan EMI. You can also calculate the EMI on Home Loan calculator available on the website of your financial institution.
When calculating your Home Loan EMI, if you feel that you are paying a higher interest amount and need some reduction, here are some tips you can implement to reduce your interest burden:
Look for Low Interest Rates:
When applying for a loan, most are often concerned about the interest rate which they have to pay over their loan amount. At times, you might come across some people who pay a higher rate of interest on their loans. The reason behind this can be a poor research. To avoid this situation, it is significant that you compare all the financial institutions as well as the interest rates offered by them before applying for a loan. As interest rates charged by lenders differ, you might come across some lenders who are offering a different rate of interest on the same amount. In order to obtain low Home Loan interest rates, it is essential that you research well.
Despite having a low Home Loan interest rate, paying a high amount as a down payment can reduce your monthly EMIs. In fact, you can determine your Home Loan EMI for a rough idea with online calculator which available on the website of your institution. Many-a-times financial institutions ask their applicants to pay a down payment about 15% to 20% of the loan amount. Furthermore, this can help you reduce your financial stress. However, it is essential to note down that the lender won’t allow you to pay a down payment which will reduce your EMIs up to 40%.
Shorter Loan Tenor:
At times, a lot of people choose a long-term tenor option, wherein, they can pay less EMI amount for a longer period of time. But what they often tend to forget is that they are eventually increasing their debt repayments. It is important that you get rid of your financial debts as early as possible. Hence, choosing a short-term loan tenor can help you to reduce your Home Loan interest burden.
In order to reduce your interest burden, it is essential that you follow the tips mentioned above. As Home Loans are considered to be one of the important financial decisions, managing it accordingly is extremely important.