Here is how you can save big on your Home Loan repayment

Most individuals apply for home loans to arrange for financial support when it comes to buying a house. While lenders offer various home loan plans that you can choose from, it is necessary to complete your research before opting for a specific loan plan in order to pay off the loan without any financial difficulty.

Here are 6 tips that you must keep in mind to ease your home loan repayment:

1. Carry out extensive research
 

Research is an important part of finding the perfect lender to finance your home purchase. Here are a few factors that you should focus on to ensure that your home loan’s repayment goes smoothly:

· Home Loan amount and eligibility criteria: Check whether the loan amount that you require can be granted by the lender. In addition, check the lender’s home loan eligibility criteria to understand the amount that you qualify for.

·  Rate of interest: This criterion is important as the interest rate of a home loan impacts your EMI payments and will affect the overall cost of the loan.  

·  The type of interest rate: If you opt for a fixed interest rate, your home loan’s interest rate is fixed as soon as it is approved by the lender. Conversely, if you opt for a floating interest rate, your home loan’s interest rate will keep getting revised at specific intervals. Make sure to choose the type based on your preference and budget plan. 

2.  Use a Home Loan EMI calculator
 

It is essential to be aware of a loan’s repayment plan before taking one. This is where a home loan EMI calculator can help. A home loan EMI calculator has three important fields that need to be filled – the home loan amount, the repayment period, and the interest rate. Based on these details, this calculator displays the EMI payments that you will have to pay every month during the repayment cycle. Every major bank has its own home loan EMI calculator that can be accessed online.

3. Negotiate with the lender

Since home loan lenders tend to be banks or housing finance companies, a long-term association with them can be beneficial for your home loan application. If you have availed yourself of the various services of a bank and have a good credit history, you can negotiate with the bank to get favourable loan terms. Although it is not a given, there is a possibility of your interest rate being reduced.

4. Opt for prepayment if possible

You must always bear in mind that a longer repayment period entails the accruing of a higher rate of interest on your principal home loan amount. You can choose to go for the pre-payment facility if the bank you have taken the loan from provides it. A pre-payment facility allows a borrower to repay their home loan in part or full before the completion of the loan’s tenure. As mentioned in the first point, you must have this facility in mind while deciding on a lender and must opt for a lender that offers a pre-payment facility.

5. Make a large down payment

In addition to pre-payment, you can also make a large down payment and borrow a smaller loan amount. This has the benefit of improved creditworthiness since it lowers your home loan’s principal amount. Making a down payment can also have the added benefit of a lower processing fee.

6.  Go for a Home Loan balance transfer
 

You may find a different lender offering better loan terms as compared to your current loan plan. In such cases, you can opt for a home loan balance transfer. A home loan balance transfer involves transferring your existing home loan’s outstanding balance from one lender to another. You can then start repaying the remaining loan amount to the new lender based on the revised loan terms.

These are a few tips that can help in easing the repayment of your home loan. If you are looking to apply for a home loan, you can head over to the IDFC FIRST Bank website and make use of the home loan calculator to learn about a particular home loan plan’s monthly instalments. 

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.