Aug 24, 2023

Reducing Home Loan EMI: Calculators & Tips for Prepayment

by Godrej Properties Limited

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A home loan is a crucial financial tool for owning a house. However, sometimes the loan or interest rates can be high, and the total repayment amount becomes stressful. To manage your finances smartly, consider devising a plan to reduce the interest paid on your home loan EMI. This approach will help you build up more savings in the long run and make your homeownership journey even more rewarding.

Strategies to Lower EMIs

Here are a few strategies that can help to lower EMIs on home loans.
 

Utilise Home Loan EMI Calculator for Precise Planning

A Home Loan EMI calculator can assess the exact EMI amount based on the loan amount, interest rate, and tenure. As a result, this will help you budget finances efficiently.
 

Opt for Longer Loan Tenure for Lower EMIs

Choosing a longer loan tenure can significantly lower your EMI amount. While the overall interest paid may increase, this option can ease your monthly cash flow, making it more manageable.
 

Make a Higher Down Payment

By making a higher down payment, you reduce the principal amount of your loan, leading to lower EMIs. Consider utilising savings or other sources of income to increase your initial payment.
 

Negotiate for Lower Interest Rates

Negotiating with your lender for a lower interest rate can substantially impact your EMIs. A slight reduction in the interest rate can help you save a considerable amount over the loan tenure.
 

Look for Balance Transfer Options

Evaluate a home loan balance transfer if you find more favourable interest rates than the existing lender offer. Transferring your loan can lead to reduced EMIs.
 

Make Part Prepayments to Reduce Principal

Utilise bonuses or windfalls to make part prepayments towards your home loan EMI. Reducing the outstanding principal leads to reduced EMIs or shorter loan tenure. Just paying one additional EMI every year can reduce the debt burden substantially. 

Home Loan Prepayment Calculator for Accurate Assessment

A home loan prepayment calculator is a handy tool that helps you figure out four important things once you make a prepayment on your home loan. 

These are:

  • EMI Percentage Saved: This shows how much of your Equated Monthly Instalment (EMI) you have saved by making the prepayment.
  • Revised Instalment Amount: After factoring in the prepayment, this shows the new reduced EMI amount.
  • Savings: By making the prepayment, you can see how much money you can save over the loan term.
  • Tenure Deduction: This shows your loan's reduced tenure (duration) due to the prepayment.

Conclusion: Strategies for Financial Ease

From using a home loan eligibility calculator for precise planning to exploring prepayment options, there are various ways to ease the burden on your monthly budget. By following these tips, you can manage your finances better.

 

Frequently Asked Questions

Q: Why use a home loan prepayment calculator?

A: By using this calculator, you can evaluate whether making a prepayment on your home loan is a profitable move or not. 
 

Q: Why choose a step-up EMI plan?

A: A step-up EMI plan allows you to start with lower EMIs initially and gradually increase them over time as your income grows. 

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