How you can Effectively Reduce Your Interest Outgo?
The bob home loan interest rate is the percentage of the principal amount charged by the lender for borrowing the loan amount. Sine home loan EMIs are spread over long tenure, wrong planning can strain your monthly budget if you don’t have a solid strategy in place. The monthly outgo or EMI are influenced by the amount of your loan, the interest rate chargeable on your loan, and the term of your loan. One poor planning, you may end up paying more on your loan; thus, it is critical to understand small details of your home loan that can help you save money.
Understand that home loan rates in the market fluctuate, and even a small difference in the rates proposed by the lender can make a significant difference in the pockets of borrowers.
Points to be Kept in your Mind If you Wish to Reduce your Interest Outgo
To get the lowest possible tata capital housing finance rate, keep the following points in mind when planning or applying for a home loan.
Get credit for a shorter period of time: The loan’s term is one of the primary factors influencing the amount of interest you must pay. While a shorter loan term will increase your EMI, it will also ensure that your principal is paid off sooner. Interest is calculated on the principal, and once your financier has recovered the principal, the absolute rate of interest paid out decreases slightly. Longer tenures of up to 30 years will reduce your EMI, whereas short tenures of up to 15 years will reduce your overall interest liability. To understand the savings associated with shorter loan tenures, use a tata capital housing financeEMI calculator and experiment with different combinations of principal, tenure, and interest rates.
Increase your EMI on an annual basis: Increase your EMI by at least 5% each year to speed up loan repayment and save money on interest. Such annual increases in the loan payment schedule will assist you in paying off the loan before the maturity date. Get to know the possibility of the advance payment and extra payment terms with the lender in order to pay off liabilities, reduce loan tenure, and reduce additional interest outgo.
Prepayments should be increased wherever possible: Lenders do not charge prepayment or loan foreclosure fees on floating-rate loans. So, if you’ve taken out a loan, try to pay it off as soon as possible. This is due to the fact that you pay more interest than principal on your loan in the first few years compared to later years. Making frequent prepayments reduces the principal amount significantly, lowering the total interest owed. However, some lenders charge a small fee for prepayments on fixed-rate loans. As a result, it’s a good idea to check with your lender about prepayment penalties, if there are any.
Check and compare online interest rates: One should conduct extensive research on available loan products before deciding on a specific type of loan or lender to compare rates with. Nowadays we have various third-party websites that can assist you in understanding the rates and other fees charged by various lenders. It is recommended and beneficial to compare home loan interest rates across all financiers before narrowing down on a specific lender. However, before going ahead, carefully review the terms of your lender. Check if the lenders impose any penalties for early repayment or foreclosure. Before you proceed, it is best to understand these key terms and calculate your EMI using a tata capital housing financeEMI calculator. All you need to do is simply enter the loan amount, term, and interest rate. Once you’ve finished the calculation, you’ll be able to see not only your EMI but also a detailed breakdown of your repayment timeline.
Home loan balance transfer: If you believe your current home loan’s interest rate is too high, you may benefit from a balance transfer. Financiers provide the option of a tata capital housing finance balance transfer to help borrowers reduce the EMI burden on their outstanding home loan amount. You can use this service to transfer your outstanding loan balance to another lender who is offering you a lower interest rate. However, before deciding on a tata capital housing finance balance transfer, it is important to read the fine print and be aware of prepayment and foreclosure penalties. One should only consider switching their existing lender to a different lender only if you’re getting a better deal in terms of interest rate, convenience, and flexible terms.
Increase the down payment amount: Most financiers fund approximately 75% to 90% of the total value of the property, with borrowers contributing 10% to 25% of the remaining cost. If you could managed to get extra funds, consider making a larger down payment as this will benefit you in the end in terms of less monthly outgo. By making a larger down payment in the beginning, your total loan amount will be reduced thus, lowering the overall interest.
Strive for better terms with your lender: Employees, existing customers, and borrowers with a good payment track record typically receive preferential treatment from lenders and may be offered a lower interest rate on your loan.
Consider Increasing your down payment: Financial institutions can finance the bob home loan to 70%-75% of a property’s current market value. The rest of the amount must be borne by borrowers in the form of a down payment. For those who are unversed, the Loan to Value (LTV) ratio refers to the amount that a lender finances. Usually, a higher down payment means a lower loan principal, which also lowers the monthly EMI outgo. Furthermore, if you apply for a loan with a lower LTV, your bob home loan eligibility will instantly increase because the risk of the borrower defaulting is significantly reduced.
It is thus preferable to reach an agreement with your lender if you have a prior relationship with them. Consider negotiating better terms and interest rates so that you can benefit from a lower bob home loan interest rate. These are some of the best options for obtaining the lowest bob home loan interest rates. However, it is critical to select the right lender so that you can enjoy a hassle-free process with the best interest rates available.