Have you found your dream home?
If your answer is “YES”, Excellent!
NO?? Then you can take the help of a real estate consultant.
Finding the right home can be a tedious task , so you should consider talking to a property advisor before finalizing on your dream home.
Here, we are going to address the issue that you may come across in the process of home buying : LOAN.
With loans , come the issues of interest. Interest rates are one of the major concerns while finalizing on a loan. A slight difference in loan rates could go a long way in reducing your burden since it is probably a huge or one time investment.
We will try to list out some of the best practices that will help you reduce interest rates on your home loans.
1. Shorter Duration Loans
Taking home loans for a shorter duration of time will definitely increase the EMI amount, which may be a burden. But, it will also ensure that your principal amount is paid off earlier.
Interest rates are calculated on principal amounts, so paying off the principal amount earlier will help you surely reduce the overall absolute interest.
2. Pay off Extra Annually
As most people receive appraisals annually, a possible scenario would be to increase your monthly EMI outflow. You can approach the bank and get your EMI re-adjusted to suit your portfolio.This increase in monthly EMI can go a long way in helping reduce your principal , which will indirectly reduce your interest amount.
3. Possible Home Loan Refinancing
You should always be vigilant on the prevailing home loan interest rates. You may come across lenders offering lower interest rates than your current lender. In this scenario, you can decide to make the switch. However, before making the switch, always make sure to check the terms and conditions attached to it.
You should ensure that savings got from a lower rate of interest are not lower than the cost of switching to a housing loan provider, with lower interest rate.
4. Make the MCLR Shift
Banks have shifted to marginal cost of funds based lending rate from the base rate earlier. This step was taken to protect the borrower from any change in interest rates. While finalizing on a home loan with low interest rates, make sure that you choose such a plan that matches your monthly budget.
Also, note that these tips are by no means exhaustive and can vary from person to person. We have tried our best to highlight the ideal scenario for you.