Individuals are likely to avail substantial funds as a home loan that leads to sizable EMIs for an extended period. Thus, it may often increase financial obligations to some extent. You can search tips on how to reduce the home loan burden or how to clear loans faster or how to get rid of home loan. However, by adopting correct measures, individuals can reduce the loan burden considerably.
Borrowers should try to repay home advances at the earliest for a reduced burden. Like, by increasing the EMIs, individuals can reduce the outgoing amount on the accumulated interest in the long run. Such measures help individuals to lessen both tenors as well as the payable interest amount, thus reducing the total repayment liability.
Top 5 Tips – How to Reduce the Home Loan Burden
You will get better understanding on how to get rid of home loan and how to clear loans faster. Followings are some other tips that help borrowers on how to reduce home loan burden effectively.
Analyse Available Loan Offers
Individuals should always compare different home loan offers, rates of interest, other charges like balance transfer fees, processing fees, prepayment charges, etc. from various lenders. It is an important factor to be considered when thinking on how to clear loans faster. Financial institutions levy all these charges depending on the credit risk of the borrowers’ profile, among other factors.
For instance, individuals with excellent credit history and higher CIBIL scores can negotiate better to avail loans with lower interest rates. Furthermore, financiers may also offer different interest rates as per the job profile of borrowers. Thus, to avail the right deal with minimum loan burden, individuals should compare all the options depending on their income, credit history, and other qualification criteria before applying for a home loan.
Make a Sizeable Down Payment
One of the most important determiners of home loan burden is the amount of down payment. As per the RBI, buyers can avail up to 75-90% of the entire property’s constructing or purchasing expenditure as advance. Borrowers can purchase any property by funding only 10-25% of its cost on their own.
However, it is advisable to opt for a sizable down payment that reduces the loan burden. The obtained loan amount becomes lower when individuals go for higher deposit payments, which consequently, also leads to a lesser rate of interest and EMI. Furthermore, the financial risks for lenders become considerably low with bigger token money that can guide to easy home loan sanctioning and disbursement process. Nonetheless, individuals should never consider their contingency funds or reserved balance for important financial goals as a higher down payment. This can lead individuals to borrow further financial support to meet these essential requirements at times.
Choose a Shorter Tenor
Home loan tenors play a crucial role in determining EMIs. Longer home loan tenors come with lower EMIs that can act as a temporary relief from loan burden. However, it accumulates substantially high interest on the principal amount and makes the total payable amount a lot more than the loan amount availed. If borrowers opt or shorter tenors, they might be paying higher EMIs, but the accumulated interest and total outstanding amount reduce effectively.
Borrowers should choose loan tenors that enable them to pay more on the loan amount and less towards accumulated interest. With the help of a home loan EMI calculator, individuals can estimate the best loan tenor as per their repayment capacity.
Borrowers can opt for different payment options like part prepayment or foreclosure of the loan amount. Availability of lump sum funds can make opting for either of these options convenient.
Borrowers can reduce their interest accruing as per home loan rates of interest by utilising an available lump sum amount to prepay or their loan liability. Such facility allows repaying a chunk before the tenor, thus cutting down interest accrual and reducing loan burden.
To avail of this benefit, individuals have to pay only nominal charges, making the repayment facility affordable. Thus, borrowers should look for these prepayment options to make the loan offer more affordable.
Balance Transfer Facility
For existing home loan borrowers, if an existing interest rate on the housing finance is higher than that available with any other lender, they can choose the balance transfer facility. Under this, they can opt for a different financial organisation that provides home loans at an affordable rate of interest. This is one of the best answer on how to clear loans faster and effectively.
Nevertheless, it is ideal to take this facility into consideration towards the beginning of the tenor. It is because, towards the tenor’s end, individuals would already have paid a substantial amount towards interest liability.
Reputed financial institutions offer this balance transfer facility at affordable charges and minimal documentation. Also, financiers offer top-up loans on the facility for additional financial requirements.
Some Housing Finance Companies also provide pre-approved offers to make the loan approval process easy and hassle-free. Not only home loans but also loans against property come with these offers, among other financial products. Moreover, applicants can check their pre-approved offers easily by entering their credentials like phone numbers and names online.
Considering all the above tips on how to reduce home loan burden while planning your finance. This information will assist you on how to get rid of home effectively. With these considerations in mind, they can proceed on how to clear loans faster with your lender.
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