The tenor and interest payable on a home loan determine the installments a borrower has to pay every month. Nonetheless, it is advised you use an EMI calculator for a house loan to assess the due interest and principal amount beforehand.
Here are is a list of 3 other factors that can reduce EMI payments on your home loans –
Consider refinancing your home loan
By refinancing a home loan, borrowers transfer the remaining loan amount to another financial institution, offering lower interest rates. Once you have successfully transferred your credit, the reduced rates automatically bring down the EMI payments.
Top financial institutions also offer a top-up loan, which has no end-use restriction and a lower rate of interest. You can even use it to repay your EMIs as well.
Larger down payment
Before applying for a loan, it is advised that you save enough funds to contribute to a significant down payment. Borrowers usually cover 10%-20% of the loan amount, and the housing finance company covers the rest.
By making a more significant down payment, you can lower your loan-to-value ratio. Not only does this raise your chances of loan approval, but you also have to pay affordable EMIs as the loan amount is comparatively less.
You can also reduce the EMIs by making part-prepayment. The facility reduces the outstanding principal; this, in turn, decreases the total interest payable. Part-prepayment is recommended to borrowers as home loans can stretch for 20 years.
It is advised that you use an EMI calculator for a house loan
compare rates offered by financial institutions before availing a loan to ensure the lowest EMIs possible. If you have a high CIBIL score, then you can also negotiate with the lender to settle for affordable rate of interest.