10 Tips to Help Save Interest on Home Loans
10 Tips to Help Save Interest on Home Loans
It’s the need of the people to have a home of their own, which forces people to take a home loan. A home of one’s own allows with several benefits; the freedom of living is one of the prime benefits if a person has a home of one’s own.
An own home allows people in getting rid of paying rents, which in our opinion is a complete waste of money (since a rented home will never be yours!). With several restrictions imposed by the homeowners in a rented accommodation, the family finds it difficult to enjoy their life, in the rented accommodation. Thus, the better choice is always to go for the home of own, if you are stable in a city.
Home Loans are the Saving Grace
A Home loan offers the people with a helping hand, if someone is really short of money to buy a home. Also, a home loan offers other benefits in the form of the saving income tax, and also offers a comfort of mind, in not paying the entire amount in a single go, while buying a home.
Additional Responsibility with Home Loans
As, the time progresses, the person can easily pay off the loan amount to the bank, quite easily. But, still every loan comes with a responsibility and that responsibility is to pay EMIs (just like rents) and to clear off complete dues. Since, Home loans are the secured loans, banks are at minimum risk with such loans, and a borrower needs to pay off complete dues to relieve the asset pledged towards the home loans. Even, interest rates being incurred at home loans add some pain to the borrowers.
Tips to Reduce the Burden of Interest on Home Loans
Here, we are to help you in relieving some of your pain and tension and will be putting forward some of the tips to help you save interest on Home Loans.
Check your CIBIL Score
In the list of 10 tips to reduce your interest on Home Loans, the first and most important is the CIBIL Score. Whenever, there’s a talk of loans; either it is home loans or any other loans types, the CIBIL is always going to feature. In fact, CIBIL is the Credit Reputation of a person, which is calculated by the credit score calculation agency. It furnishes the entire financial history of a person, which is a determinant in the approval and disapproval of the loan and also is a deciding factor in the interest rates of a loan.
So how will it help here? Check your CIBIL Score before applying for home Loans. Your lenders may tell you that your CIBIL Score is not good and thus can charge you higher rate of interest. Thus, better be prepared before in hand and have your CIBIL Score on your own. If you think, there’s a mistake in the CIBIL Score, you can also raise a dispute against it and get it rectified. Thus, checking your CIBIL Score and keeping yourself an update with the credit score, allows you in availing home loans at cheaper rate.
Look for Various Options
Before you finalize any deal with your chosen lender, why don’t you try getting better deals from all other banks or lender agencies? Our research says, you should have consult with various options and put down on paper all the offerings by several banks. It allows you in comparing the best offers as offered to you for your Home Loans needs, and will help you in making a better decision. You can also consult with the entire family, if the various offerings are in your hand, thus helping you in arriving at the best deal.
Approaching to various banks, either online or by a visit allows you in knowing their basic offers and who knows you might get a friendlier deal for your home loans from bank other than your current bank, where your savings account is present.
Negotiate with your Lender
Since, the various deals and offerings are with you; now you can negotiate better with the chosen bank. Always remember that the negotiation is always possible with any kind of loans; either it is home loan or a personal loan. You have every right to negotiate with your bank for the best offer. Never shy away from doing so, as it will have a very long term effect on the EMIs you are going to pay for another 10, 20 or 25 years. So, doing your best towards getting the best deal from the bank should be your prime goal and try to do it in the best possible way! Even, if you are successful in getting the rate of interest by a mere 0.1%, its going to highlight a lot in the long term in your home loan and you can save huge interest in your home loan.
Make Higher Down Payment
So, after you are done with the negotiation process, what’s going to be the down payment for the property you are going to buy? The recommendation of Deals of Loan is, you should always go for the higher down payment, as it allows in taking you the minimum Home loan amount, thus saving you some money in EMIs as an interest. Generally lenders demand for around 20% of the property’s value as down payment for the very least, but if possible you can arrange some more, thus offering you more space and relief from additional home loan interest. Remember the golden rule ‘The less you borrow, the less you need to pay; the more you borrow, the more you need to pay off’. With the reduction of your EMI Burden, you can have a breathing space for yourself and your entire family.
Shorten your Loan Tenure
Even, there’ another tip if want to avoid in paying lots of money as an interest. You can shorten your loan tenure to the minimum, what you can. While, most of the people are been seen as taking home loans for the tenure of 20 years, you can do it just for 10 years or 15 years, thus saving lots of interest being paid. However, you must take extra care while doing this, as the shorter is the loan tenure, the more is the EMI Amount you need to pay each month. Thus, make your every calculation very carefully and consult the family members, on this particular aspect, as they are the ones, who will be affected over the decision. Calculate all your monthly expenses, your income and any future expenses etc before making a decision on loan tenure for Home Loans.
Extra Payments Regularly
Whatever, the loan tenure is decided, your EMIs will be incurred to you very month on the pre decided date. Pay those EMIs well on time and with responsibility. However, you can also, decide on making extra payments regularly, especially on the annual basis. Consider, if you got annual bonus from the workplace, what’s the best way to spend it on? It’s the EMIs. You have every right to pay additional money, whenever you have those, and doing this helps you in reducing your principal amount, thus easing your burden of interest at Home Loans. So, next time, you have additional money in hand, don’t spend uselessly, and pay those to the bank to reduce Home Loan interest. Spending on fruitless items and other useless trips can be avoided, if you want to reduce your interest on home loan. But, always keep a better balance of your life, as the time bygone, is never going to return back!
Pay an Additional EMI each year
Many are unaware of this fact! The Deals of Loan brings you this fact, is the option of paying additional EMIs at the end of each year. Yes, that’s true. You have the option of paying an additional EMI every year. By doing this, you can reduce your overall outstanding principal and helping yourself in a way with the burden of paying reduced interest. Also, with every additional EMI being paid by you, no one will complain, especially your lending agency. However, before doing this, have a discussion with the ones, who are likeliest to be affected, i.e. your family members. Make sure with this step, you don’t have a negative effect on your lifestyle. Living happily should be the prime motive!
Annual Increase in EMI
Here’s another tip to save interest on Home Loans. Every year, you are supposed ot get the annual increment at your job! Isn’t it? So, if would like to, you can increase the EMIs for your Home Loans, thus offering you another way to reduce the interest, as more is the EMIs, the faster you will get out of your debt of Home Loans. Consider taking out some portion of your annual increment and make a calculation and increase the EMI. Remember that the increase in the percentage in EMI can be decided on the basis of the annual increment of your salary.
Switch your Lender
Now, as you are already running with your home loans, there are several lenders or banks, who can offer you better deals at your home loans and can motivate you in switching your home loans to their agencies. Avail this option of better deal with both the hands and get the lender switched for your home loans. However, read the complete and terms before opting for any switch. Who knows, you haven’t paid attention at, these point initially, while opting for the home loans, and the current bank have any hidden charge over such process. Even, if they charge some loan transfer fees and other charges, you might still be in the profit. So, take out pen and paper and your calculator and calculate, if you are benefiting from your lender switch. If yes, don’t wait to do so. Complete the process as soon as possible and get rid of the higher paying EMIs and reduce your interest on Home Loans.
Consider Repayment as a Responsibility
While, you have made all your efforts in the reduction of your interest on Home Loan, you should always remember one fact, that the home loan repayment is the responsibility and it must be carried out well. You must not forget paying your EMIs on time, in order to avoid penalty charges.
Also, you can opt for the automatic payment options, which will allow your bank to deduct the EMI amount on the decided date. Doing this, will allow you in getting rid of remembering paying your EMIs and you can focus on various other tasks of your daily life. The Deals of Loan always recommend you in paying your EMIs responsibly, which allow you in saving your money as a penalty charge and also, will you in improving your credit score, which can be very helpful in the long run, in case you decide on taking other loan, in the future!
Home Loan comes with a Responsibility
Home Loans are the ones, which can help you realizing your dream of having an own home and provide the family with the secure living environment along with the freedom and relaxation. You can offer them ample private space in their own home, above all restrictions and also allow you in building a property of yourself, whose value is always on the rise with each passing time. But, since home loan is a long term responsibility, you must consider the decision of taking a home loan with proper planning and deeper thought process.
These handy tips by Deals of Loan can surely help you in reducing your interest on Home Loans. You can substantially save huge interest amount on your home loan with these top 10 tips as put forwarded by the Deals of Loan. You can seek further help and consultation for your home loan queries with Deals of Loan, which assure you of the best consultation and services in your home loan. We are waiting to connect with you.