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8 TIPS TO REDUCE HOME LOAN INTEREST RATES
Buying a residential property is a life goal for a lot of people. They feel that owning an apartment, bungalow or villa can secure their families for a long time to come. While some people are able to buy a house because they have the financial means to make the full payment easily. However, others might need some financial assistance in order to own a home. This is where home loans come in. A pre-specified interest rate is levied on the home loan plan you choose. Every borrower has to pay off the principal amount and the interest till the time the home loan disbursement process is completed. Mentioned below are 8 tips that can help you in paying the minimum home loan interest rate:
1. Compare Interest Rates
Making a comparison of home loan interest rates is highly recommended. This is because you will be able to find the best home loan interest rates and then choose one that fits your budget. You can find out home loan interest rates online. Popular financial institutions across India offer home loans with suitable interest rates, so it would be wise to find out about their pros and cons. You will be able to make a sound decision without facing any hassles.
2. Choose a Shorter Tenure
Tenure is defined as the time frame that is set by a financial institution within which a borrower has to pay off the principal amount and interest rate on their home loan. If you choose a shorter tenure, then you will be able to get the lowest home loan interest rate. As a result, the total amount that you would have to pay off would be less. So, it is better to go for a shorter tenure.
3. Consider Making Prepayments
If your financial capacity increases over time, then you can always make prepayments for your home loan. Interest rates tend to drop when the principal amount of their home loans decreases. Keeping this factor in mind, people are encouraged to make regular pre-payments on their housing loans in order to get a reduced interest rate.
4. Try to Pay More as Down Payment
Another tip that can help borrowers get the lowest home loan interest rate in the market is paying a big sum of money as down payment. The amount of money borrowed from a reputed financial institution would be less and its interest rate would be suitable for you. So, it is a smart financial decision to make a large down payment and get one of the best home loan interest rates.
5. Look for Home Loan Balance Transfer
A lot of people end up getting home loan interest rates that are not the lowest even after making regular prepayments. In such a scenario, it is best to pay off the principal amount to another financial institution that is ready to offer a suitable interest rate on your home loan. This is known as balance transfer which is ideal for individuals who wish to get the right interest rate on their housing loan.
6. Revise Your EMI
Equated monthly instalment or EMI is the payment you make to a bank or financial institution to repay your home loan every month. Based on your credit score, salary, and other factors, a reputed bank or non-banking financial company will offer you an EMI plan. In a few years, if your financial situation has improved, then you can always get your EMI plan revised. This will help you in paying off a large sum of money that you had borrowed earlier. The result would be that your home loan tenure will decrease and so will its interest rate.
7. Think About Floating Interest Rate
A floating interest rate is calculated according to the ups and downs of the market, another benchmark or an index. The idea of choosing a floating interest rate is based on the fact that it is 1 to 2 per cent lower than a fixed interest rate. Even if the floating interest rate increases, it will only be a temporary situation. So, you can think about choosing a floating interest rate on your home loan.
8. Do Not Skip the Payments
Making payments on time is very important for every borrower. This is because your credit score depends on it. If you do not make your EMI payments for three consecutive months, then a bank or financial institution can take action against you. Moreover, your creditworthiness will get lower and the scope of getting loans in the future can become a problem.
Muthoot Finance offers home loans at competitive interest rates across the country. Customers are guided by highly qualified relationship managers throughout the disbursement process. Visit your nearest Muthoot Finance branch to know more.