Ways to reduce home loan EMI

Everyone dreams of having a home of their own, where they can live happily with their parents and children. But most people are unable to fulfill their dreams. The main reasons for this are lack of sufficient capital, difficulties in getting loan or lack of monthly budget for EMI of loan, etc. But even after all the troubles, if you have made up your mind to buy a house by taking a loan, then you have to fill its EMI without gapping. This may affect your monthly and annual budget. To avoid this situation, it is better to keep the EMI of the home loan low. Therefore, how can the EMI of home loan be reduced and the necessary information related to it is being given through this article.

Compare Home Loan Rates Online

The market for home loans in India is huge. Most public and private sector banks offer home loans. This is why there is a lot of competition in this industry. Banks also offer a variety of attractive offers to attract more and more customers. So compare home loan interest rates online to get the best offer for you. For this, visit the official website of the lending institutions. You can also go to those online portals which give information about banks and interest rates for home loans. In this way, choose a bank that can get a loan at a lower interest rate, this will make your home loan EMI less.

Choose the long term to repay the loan

If you want to keep your home loan EMI to a minimum, choose a longer term to repay the loan. Because EMI is lower in the long term and more in the short term. According to experts, if you can pay a higher EMI, then it is advisable to take a loan for a shorter period, as you will have to pay less interest in a shorter period. But it also depends on the ability of the people to repay the loan. If you cannot pay a higher EMI, then taking a loan for a longer period is better to repay the loan with a lower EMI. You can also use a home loan calculator to reduce your EMI. for example –

  • If you take a home loan of Rs 50 lakh for a period of 10 years at an interest rate of 10.5%, then you have to pay Rs 67,467 monthly.
  • If you take a home loan of Rs 50 lakh for a period of 15 years at an interest rate of 10.5%, then you have to pay Rs 55,270 monthly.
  • If you take a home loan of Rs 50 lakh for a period of 18 years at an interest rate of 10.5%, then you have to pay Rs 51,611 monthly.

Downpayment as much as possible

Banks finance up to 80-90 percent of the current market value of the property. For example, if the market value of the property is Rs 50 lakh, then banks can finance only from Rs 40 to 45 lakh. You have to downpayment of the remaining amount. So make a maximum downpayment, but save money for other future needs. More downpayment reduces the LTV ratio. Having a lower LTV ratio increases the likelihood of loan approval. Also, EMI is also less on the remaining balance.

How can those who currently have a home loan reduce their EMI?

Experts believe that current home loan customers should refinance their loan. Customers always have the option to refinance the loan. Meaning customers can switch to any other bank in the market. Otherwise, you can take advantage of low-interest rates by negotiating with the current bank. If you have more capital, and if possible, you can pay the loan before the loan period. Prepayment reduces the burden of higher interest.

Factors affecting EMI of home loan

The EMI of a home loan is influenced by the principal amount, interest rate and loan tenure. The principal amount is the actual loan amount. The lower the principal amount, the lower the EMI. The EMI will also be higher at a higher principal amount. Interest rate is the rate at which the bank approves your loan. The term of the loan is the time within which the loan is to be repaid.

Home loans have made our life easier. Through this, we can build or buy our own house, but before taking a home loan, we should know about a fixed rate home loan and a temporary home loan. Otherwise, we can get into trouble and lose our capital by paying more interest.