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Home Loan

Five ways to reduce your Home Loan EMI

Summary: Home loan EMI is one of those monthly expenses that attract more than half your monthly income. here are some 5 tips to reduce home loan EMI.

22 Apr 2022 by Team FinFIRST

Usually, Home Loan EMIs attract more than half your monthly income. But here are some ways you can reduce it
 

A home loan EMI is one of those monthly expenses that can easily overshoot your estimated monthly expenditure, using a significant percentage of your income and end up exhausting your budget for month sooner than you have planned. Therefore, it is necessary to plan it right so that you can manage your expenses within the monthly budget and yet end with a reasonable amount for savings every month, even after paying your EMI.

If you are a salaried individual, you would most certainly set aside a fixed amount from your monthly salary to repay your home loan EMI, which you can't afford to utilise for other financial requirements or exigencies. But more often than not, unforeseen situations do arise in a month and you start looking for a quick way-around to pool in some additional money to meet the requirements.

 

To avoid such occurrences, here are some suggestions that can help you lower your home loan EMI.

How to reduce Home Loan EMIs?
 

There are ways in which you might be able to reduce your home loan EMI.

A higher down payment
 

The amount paid in advance by you at the time of purchase is known as the ‘down payment’. Because you bear a portion of the entire cost of the item, the amount that you must borrow as a loan will be lesser. The principal amount taken by you is used to compute the housing loan's interest rate.

As a result, putting down a significant sum as down payment is a prudent move. It will not only lower your home loan's EMI but will also save you money in the long term.

The greater the home loan amount, the more interest you will have to pay and the higher your home loan EMI would be.

A longer repayment time
 

For a loan amount, the payback term is inversely related to the EMI. When you choose a longer loan term, the bank spreads the total amount owed over a longer period. As a result, the amount due in monthly payments is lesser. However, choosing a longer term implies you will be charged an interest rate on the outstanding debt for a longer period.

While extending the loan term will lower your home loan EMI, it can also result in a higher amount of interest paid over the duration of the loan. As a result, you should exercise extreme caution before extending your loan term and always balance the benefits and drawbacks before doing so.

If you apply for a home loan with IDFC FIRST Bank, be rest assured that you will get some of the best rates in the market at present. Added to this is its banking app that helps you track your repayment progress and shows you how much of the amount left is interest and how much is the principal. Seeing this amount and using a home loan calculator can help you decide if you should opt for a longer repayment time.

Get a loan from a bank you have an account with
 

If you are currently a customer of a particular bank, it is a good idea to get a loan from the same bank. It could work to your advantage if you have a good relationship with your bank, as they are more likely to offer you a cheaper interest rate on your preferred loan

Negotiate
 

If you have a strong relationship with your bank, you may negotiate a reduced interest rate for the loan. Banks may be inclined to do so for their current clients to boost brand loyalty and attract new ones.

Given above are only a few ways you can reduce your home loan EMI. Another easy way to reduce your home loan EMI is by opting for a balance transfer. If you have taken a loan from a different bank, you could consider moving to IDFC FIRST Bank, which offers competitive interest rates and customer service.

 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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