Having a place of your own is one of the biggest factors of being financially independent. Property prices are very expensive which is why a lot of people stay on rent. However, this should not come in the way of buying that dream home, especially when you can apply for home loan for financial support. Now, a lot of people have reservations about taking home loans simply because many of them have faced difficulties in repaying the loans. A lot of times, one major cause for this is the high home loan interest rate.
Now, the home loan rate should not be the reason why you choose to not go for a place that you like. It is not necessary that you have to be stuck with a home loan that has a high interest rate. There are many ways in which you can effectively lower the rate in order to make the repayment easier.
Here are 4 ways that help you get the best home loan interest rate:
- Make a higher down payment
Taking a home loan does not mean that all the expenses are covered. Lenders only cover 80-90% of the property value. The remaining amount has to be paid from personal savings, which is called the down payment. Now, by choosing to make a high down payment, you can apply for a lower loan amount, thereby reducing the interest you have to pay on it.
- Go for a home loan balance transfer
If the current interest rate that the existing lender is offering seems unaffordable, do not fret. There is always an option to switch lenders for a better housing loan interest rate. This switch is known as a home loan balance transfer, where the outstanding amount is transferred to a new lender offering better terms, such as a lower interest rate.
- Repay the loan in a short tenure
A lot of people choose to do the opposite as a longer tenure means smaller monthly instalments, which are easier to pay off. However, if you are looking to save interest on the home loan, it could be better to go for a short tenure and cut down the total number of monthly instalments. With this, you are also cutting down the interest that is getting accumulated with each EMI.
- Revise the home loan EMIs annually
There are some lenders that let borrowers revise their EMIs every year. It is normal to receive salary hikes, in which case you can increase the EMI payments. Doing this will help cut down the tenure, thereby reducing the total interest you will have to pay for the home loan.
These are some of the most effective ways of bringing down the interest rate of your home loan. Make sure to use a home loan EMI calculator to check how much of a difference the interest rate is making to the home loan’s monthly instalments.