Are you considering buying a home using a home loan? If yes, then it must have occurred to you that home loans come with repaying the loan amount along with interest in the form of monthly EMIs. And who doesn’t want to save money on loans! The best way to save money on your home loan is seeking a home loan interest deduction. Read this post to learn the top seven ways to help you keep more money in your pocket and make your home loan affordable.
Best Ways to Save Money on Home Loans
Here are seven tips which can save you money on your home loan EMIs:-
1. Opt for a Shorter Tenure:
Choosing a shorter loan duration, like 10 to 15 years instead of 25 to 30 years, can significantly lower the total interest you pay. While longer tenures reduce your monthly payments, shorter ones save you more money in the long run. You can use a home loan emi calculator to see how much you'll save with a shorter tenure. Make sure to pick a tenure that suits your budget and minimises interest costs.
2. Consider Prepayments:
Prepayments, especially for floating-rate loans, can be beneficial. During the initial loan years, most of your payments go towards interest. Making extra payments towards the principal amount reduces the total interest over time. However, for fixed-rate loans, check with your lender about prepayment charges before making extra payments.
3. Compare Interest Rates Online:
Researching and comparing interest rates from different lenders is essential. Many third-party websites provide information on rates and fees charged by various banks. Take your time to compare home loan interest rates across different banks to find the best deal for you.
4. Explore Home Loan Balance Transfer:
If you're already making prepayments and feel your current lender's interest rate is high, consider transferring your balance to a lender offering a lower rate.
5. Increase Your Down Payment:
Instead of settling for the minimum down payment, consider contributing more upfront. A higher down payment means a lower loan amount, reducing both your monthly payments and overall interest. Most banks finance only a percentage of the property's value, so paying more upfront can save you money in the long term.
6. Seek Better Deals Based on Credit History:
Having a good credit history can help you secure better loan rates. Banks often offer preferential rates to customers with excellent credit scores. If you've been diligent with your repayments, you may negotiate lower rates. Additionally, keep an eye out for festive offers, as banks often lower interest rates during such times.
7. Consider Increasing Your EMI:
Some lenders allow borrowers to increase their EMIs annually. If you have more financial flexibility, opting for higher EMIs can shorten your loan tenure and reduce overall interest payments. Check with your lender to see if they offer this option and if it aligns with your financial goals.
Conclusion
These seven tips can help you save money on your home loan and achieve your financial goals faster. By being mindful of the interest rates, making extra repayments, investing your savings wisely, switching to a fixed interest rate, reviewing your loan fees, pre-paying the loan amount or increasing the EMI, and not rushing to close your home loan, you can potentially save yourself a significant amount of money in the long run. Remember, every little bit counts and small changes can make a big difference over time.
