How to reduce interest rate on your home loan?
If you are interested in investing in commercial or residential properties, but do not have adequate capital of your own, then you can approach any financial institution and apply for a home loan. Nowadays, if you have a good credit score along with a steady income, then it is very easy to get a loan to buy residential properties in Delhi, or in any other cities in India. However, getting loan is only one part of the story, you have to pay the loan back with interest, which could become a big financial burden on your resources, if you have not planned the repayment part of the loan wisely.
If you approach some of the best real estate developers in Delhi to buy any of their properties, then they will be able to help you out with easy EMI options or even getting loans from banks. However, to reduce the interest burden on the loan, you have to undertake several strategies. In this article, we have tried to explain some of these strategies, which will help you in reducing your interest rate on your home loan and thereby reducing the financial pressure on your limited resources.
1). To lower the interest payment on your home loan, you have to reduce the rate of interest on the loan. To do this, you have to first figure out which financial institution is giving you the home loan at the lowest interest rates. If you choose the bank, which is charging the lowest interest rate, then automatically your interest repayment will decrease substantially. However, if you have already taken the loan, then you have to refinance your loan at a lower rate.
2). You can also try to quickly reduce the principal amount of the loan. As the interest rates are charged on the principal amount, any reduction in this will automatically reduce your interest repayment burden. To do this, you need to renegotiate your loan with your bank and try to repay the principal amount at the earliest.
3).If you have the financial capability, then try to pay more than the EMI. This will allow you to reduce the principal amount, which will have a positive impact in reducing the overall interest burden on your finances. You have to negotiate with your bank for the early payment of the principal amount.
4).You can pay more number of EMI than mandated in your loan contract after seeking permission from your bank. The more EMI you spend, the lesser principal amount will become, which will affect the rate of an interest positively from your side.
5). You can increase your EMI amount by a fixed amount every year. As many companies increase the salary of their employees annually by a certain percentage, you can use that increased amount to repay a bigger part of your loan. This will help you in reducing the interest burden significantly. In addition, as this increase, it is proportional to the increase of your salary; you will not feel the added pinch in any significant manner.
6). If you have a fixed deposit, or any shares, then you can put higher down payment, which will needlesser amount of home loan from the banks. This will surely reduce your interest burden significantly.