How to Reduce the Interest Rate and Tenure of your Home Loan
Buying or constructing a house is a milestone in everyone’s life and here the need for a home loan arises. Though there is an option that the loan given to you can be repaid throughout a tenure of several years, it is always advisable to reduce the tenure of your home loan as it can also help to reduce the total interest payable.
Here are some essential tips that you can consider before entering into this entire process of home loans.
1. Opt for a Shorter Tenure
The tenure of your loan is the most important factor responsible for the interest rate that you will pay. Though longer tenures will help to cut down on the monthly installment, shorter tenures will help to reduce the overall interest that needs to be paid. Choose your tenure carefully before going for a home loan.
2. Pay more Down Payment
Most of the banks contribute 75-90% of the total property value. However, your contribution comes to around 10-20% of the remaining cost. What is advisable is to put in more from your pocket as a down payment. The more down payment you pay, the lower becomes the loan amount which directly reduces the interest payable.
3. Increase your EMI
Initially, you might have gone for a lower EMI based on your monthly income. But if you notice that your monthly income is increasing due to a hike or a better job, it is better to increase your EMI. It will reducing the loan tenure. Once the tenure is reduced, the interest payable against the loan will also go down automatically.
4. Look for Better Deals
Your good credit history can be a boon for all the lenders that you approach. A lot of banks give preferential rates to customers with good credit history. If your credit score is close to 800, there are chances that you might get better interest rates on your home loan. Do thorough research and carefully choose the deal that favours you the most.