Simple yet smart ways to reduce your Home Loan interest rate

1. Simple yet smart ways to reduce your Home Loan interest rate A home loan enables you to buy your own home. Rather than paying monthly rents on a leased house, it is always advised to buy your own home with a home loan and pay the rent towards the EMIs. At least, after the end of the loan tenure, you would have a house to your name. Home loans are, therefore, very popular among home buyers. Though the loan enables you to purchase your own home, you cannot ignore the associated interest burden. Home loans charge interest on the loan you borrow. You can reduce your home loan interest rates through some simple tricks. Do you know what these tricks are? Let’s find out – Smart ways to reduce home loan interest rate •Shop around for low interest rates If you are a potential borrower, don’t be in a hurry to avail a loan. Different loans have different rates of interest. Shop around for the lowest interest rates and then avail the loan. •Transfer your home loan balance Lenders allow you Home Loan balance transfer option wherein you can transfer your existing home loan from one lender to another. So, in the initial years of availing a loan, if another lender is offering you low interest rates, opt for the balance transfer facility. Transferring the loan in the initial years is better as the difference in interest outgo would be considerable when transferred early than late. •Prepay your loan if you have additional funds •Partial prepayment of the loan is allowed under home loans. If you get surplus funds in your hands, direct them towards prepayment of your home loans. When you do so, your loan burden would reduce. Since the interest is charged on the outstanding amount of loan, lowering the loan burden would Put a high down payment on the loan lower the home loan interest payments too. Home loans are not allowed for the entire value of the house property you want to buy. You have to make a down payment on the house property and then avail a loan for the additional cost. If a high

2. down payment is made, the amount borrowed is low. As the amount of loan is low, the interest rates would also be low. •Increase your EMIs over the years If you want, you can pay higher EMIs towards your home loan. Try and increase the amount of EMIs of your home loan as the years go by. Increasing the EMIs by 5% of 10% every year would ensure quicker repayment of the loan. As the loan is quickly repaid, the interest repayment would go down and you would save on the interest cost of the loan. •Do not default on the loan When you default on the repayment of your home loan EMI Calculator, you would be charged an additional penalty fee. This fee would be in addition to the home loan interest rate already paid under the loan. The late payment fee and the interest rate together would increase the total additional outgo. So, don’t default your home loan repayments. Always pay on time. •Choose MCLR interest rates Home loans are now being offered on interest rates which are calculated on the MCLR (Marginal Cost of Lending Rate) of the lender. MCLR rates are lower and floating in nature. These rates keep on changing and are, therefore, better than fixed rates of interest. So, choose your home loan on the MCLR rate calculation basis as it would give you a lower home loan interest rate.

3. These tips, when chosen, help you in lowering your home loan interest outgo. So, choose these tips and reduce the cost of your home loan.