When anyone applies for a home loan and more, they strive to avail of the facility at the lowest possible rate. And a home loan is not an exception.
You may say that housing loan interest rates are lower because it’s a secured debt.
But with home loan tenor extending 20 years and more, many people go for a longer tenor. It is to pay lower EMIs, which is a good thing.
But spreading the loan amount over a longer tenor means dealing with a higher housing loan interest rate.
It would be right to follow a few tips to help you avail of a housing loan at a lower rate.
Go through this post and find out more!
Here’s how you can avail of a lower home loan interest rate
1) Ensure to pay a higher down payment amount
When you avail of a housing loan, the cost of the property is not entirely covered by it. It is because some part of the home cost needs to be arranged on your own. Generally, a down payment amount is 15-25% of the property’s cost. But if you can save and pay a considerable down payment amount, you can save on interest charges. The higher is your down payment amount, the lesser will be the borrowed figure. In turn, your housing loan interest rate would also go down. Overall, you will be able to save and enjoy paying a lower EMI amount.
2) Choose a shorter tenor
When you avail of an online home loan, you should try to go for a shorter tenor. Doing that may increase your EMI amount. But you will save on the interest charges for opting for a longer tenor. If you want to know an EMI amount and housing loan interest rate charges over a small or longer tenor, you can use a tool. It is called the home loan EMI calculator. Once you enter the home loan amount, interest rate, and repayment tenor, the online tool will showcase the EMI amount. Along with this, you will also know about the housing loan interest rate charges and total loan cost. With these vital elements before you, you would be able to make the right decision.
3) Make prepayments
If you are an existing loan borrower, you can make prepayments during the tenor. This way, you can bring down your loan amount and the interest charges. In turn, you can pay off lower EMIs. Before prepaying, you should check out the costs of doing the same.
4) Switch your existing home loan account to a lender
You can also switch your current home loan to a new lender offering a lower housing loan interest rate. This process is known as the home loan balance transfer. If you see your lender not adjusting the rates, and a new lender offering a good deal, go for it. But, when you switch your home loan to a new lender, a charge will be levied by your current and new lenders. If the charges are higher than your estimated savings, you should not go for a housing loan balance transfer. You can know about savings by using the online home loan balance transfer calculator. It is an online tool available round the clock for use.
A home loan is a long-term commitment. If you see any scope to bring down the housing loan interest rate, you should not miss it.
Even if there is a slight difference in interest rate, it means thousands to lakhs of savings as per your home loan amount.
