Home is no longer just a place to lodge. It is a space that emits a sense of security and belonging. Buying a home is one of the biggest and most important financial decisions in anyone’s life. People often wait years to save up capital to buy a home. But nowadays, the availability of home loans from renowned banks and NBFCs has made buying a home comparatively easier.
If you have chosen the house of your dreams, then the next step is to start looking for a loan provider that offers a home loan at a low-interest rate.Yes, it is highly crucial that you pay a low rate of interest on your home loan so you do not run into financial distress in the long term.
Let’s learn how to reduce home loan interest:
● Compare and choose accordingly
This is one of the primary factors that could help you have a lower rate of interest. While looking for NBFCs or financial institutions to apply for financial aid for buying a home, it is important that you weigh your options. Compare the rate of interest on your home loan before finalising any lender. Many NBFCs offer home loans at the best interest rates, exactly what you need. The idea is to choose a bank or NBFC offering the lowest interest rate on the home loan.
● Down Payment
When buying a home, if you pay a more significant amount as a down payment on the entire price of the property, you would have to take a smaller amount of home loan. This will lower your rate of interest as the principal amount of the loan is low. So, it would be wise that you try and save up before buying a property.
● Choose a shorter tenure
Tenure plays an important role in lowering home loan interest. A home loan tenure can go up to 30 years, which results in higher interest rates on the principal amount. However, when you go for a shorter tenure, the rate of interest on monthly instalments is also reduced. You may check the rate of interest payable on your home loan by using a home loan EMI calculator at the time of applying for a home loan. So, before you decide on the tenure, you can once calculate the rate of interest on the home loan.
● Balance Transfer
This has to be one of the best alternatives to reduce the rate of interest on a home loan. You can lower the rate of interest on a running home loan by transferring the remaining principal amount to a different bank or NBFC at a lower rate of interest. However, keep this alternative as your last option because the NBFC or bank you choose for a balance transfer may charge a fee on the principal amount.
Prepayment can also help in reducing the rate of interest on a home loan. Some banks/NBFCs do not charge for prepayments or foreclosures on a floating interest rate. Timely prepayment will help you reduce the principal amount and subsequently, the interest payable. However, some banks charge a certain amount on prepayments of home loans at fixed rates. So, get in touch with your lender when choosing prepayment or foreclosure.
Buying a home or taking a home loan is, indeed, a big decision. So, you mustn’t rush. Take your time in researching all aspects of home buying, and home loans, and once you are done, you can check out the best-in-class residential projects by Godrej Propertiesand have a comfortable yet style lifestyle.