Investments & Tax Fundamentals

Here’s how you can bring down your home loan EMI

Here’s how you can bring down your home loan EMI

Okay, so you’ve successfully availed a home loan and you’re on the way to achieving your goal of purchasing or constructing your dream home. Now, the next logical step would be to meet your home loan repayment schedule on time. For most people, that’s easier said than done. Since home loan EMIs would most likely be the among the most significant expenses in household budgets, home loan repayments may, at times, prove to be financially draining.

That said, there’s a way out of such a situation – reduction of home loan EMIs. By reducing your home loan EMIs, you can not only lower your financial burden, but you can also make your repayment schedule more relaxed and convenient. If you’re looking for some ways to bring down your home loan EMIs, here are some tips that you can follow.

  1. Make larger down payments
  2. If you’re just about to opt for a home loan, then this idea will work for you. Typically, home loans cover somewhere up to 60% to 90% of the entire home value. The remaining amount would have to be paid by you upfront. This is what is called the ‘down payment.’ And the bigger the down payment that you put in for a loan, the lower your home loan EMIs will be.

    This is due to the fact that larger down payments tend to reduce the overall loan amount that you opt for, thereby reducing your loan EMIs to a certain extent. So, if you find yourself with some extra cash or savings while applying for a home loan, it would be a good idea to use it to make a larger down payment on the house.

  3. Opt for longer tenure
  4. When you’re applying for a new home loan, make sure that you opt for a longer tenure if you wish to lower your EMIs. This is because when your overall repayment amount is divided across a longer period, the amount you’ll have to repay each month reduces, ultimately making your loan EMIs much lighter.

    If you’ve already opted for a home loan, talk to your lender about extending the loan tenure. Most financial institutions will be open to increasing the loan tenure to reduce your home loan repayment obligations. That said, always ensure that you make use of a tool like a home loan EMI calculator to better understand the nuances and repercussions of extending the tenure before you approach your lender.

    With Hero Housing Finance’s Home Loan Plus, for instance, you can avail a loan with a tenure of up to 30 years. This means you can either increase your borrowings by about 40% or reduce your EMIs by around 20%. Both these options have a beneficial impact on the borrower.

  5. Prepay your loan
  6. This idea is arguably the best option that you can choose to reduce your home loan EMIs. Making prepayments and partial payments on your loan can reduce your overall outstanding loan amount. Since you’re paying a huge chunk of your loan outright, this action would, in effect, end up reducing the loan EMIs that you’re required to pay each month. Here’s a word of caution though. Check out the terms and charges, if any, associated with loan partial prepayment.

    This is something that you should be aware of while choosing this option. Always remember to check with your lending institution regarding their prepayment and partial payment policy, and verify whether there are any charges that would be applicable for the same. Nevertheless, even if you’re required to pay a small penalty for making prepayments, it is sometimes a good idea to bear the additional cost since it can work towards reducing your home loan EMIs considerably.

  7. Opt for a loan balance transfer
  8. Another great way to bring down your home loan EMIs is to change the lending financial institution altogether. But before you do that, make sure that you search for and choose a lender that offers a lower interest rate, an extended loan tenure, and affordable loan application charges. You also need to ensure that the lender is financially stable and scores high on other aspects like customer service and short loan processing times. Once you’ve found a lending institution that meets these criteria, you’ll find that it’s quite easy to transfer your loan.

    All you need to do is get in touch with both the lenders – the new lending institution you’re considering and your existing lender – and place a formal request for a loan balance transfer. Before opting for such a move, it is a wise idea to always ensure that the terms of the loan that the new lending institution offers are better than the ones offered by your existing lender.

Conclusion

Additionally, if your home loan is on a floating interest rate schedule, one of the easiest ways to reduce your home loan EMIs is to opt for lower interest rates as and when they’re applicable to you. With the Reserve Bank of India keeping lending interest rates low to boost the economy, you can utilize the same to your advantage.

Home loans from Hero Housing Finance can help you keep your EMIs at a level that’s convenient for your financial budget, because you get to avail facilities like long home loan repayment tenures spanning 30 years as well as balance transfer facilities. Explore the many features and benefits of Hero Housing home loans today, so you can make a smart financial choice.