Are you considering taking a home loan soon? It will be the best decision to save yourself from renting. Paying rent every month may cost you more than getting a loan to buy your home. That means you save money when you own a home.
Apart from saving you costs, owning a home guarantees you security. You’ll also have the freedom to choose where and how you want to live when you have a home. Even when your family has grown, and you seek a bigger space to accommodate them, renting a home will be the best idea.
Tips to Reduce Home Loan Interest Rate
While taking a home loan is a sure way to have the home of your dreams, it comes with a tremendous home loan rate. The equated monthly installments you pay every month can weigh down your monthly income for a long time, which can be a considerable burden. Consider the tips here to reduce the interest burden you pay on your home loan.
Get a Loan with a Short Tenure
The loan repayment period influences the interest you will pay. The monthly installment will be lower if you take a loan with a more extended repayment period, like 30 years. However, the amount of payable interest will be higher than a loan with a shorter repayment period, like ten years. A PNB home loan with a shorter tenure reduces the overall interest you pay for the entire period.
Choose a Lender with Competitive Interest Rates and Favorable Terms
You’ll find many lenders ready to offer you a home loan. But their home loan rate varies from one institution to another. You should search well on available lenders and compare their interest rates before applying. Getting a loan from a lender with a low-interest rate and favorable EMIs can save you costs and relieve your monthly financial budget pressure.
Increase your EMI
Some lenders allow you to revise the monthly installments annually. If you get a well-paying job and can now afford higher EMIs, it can save you the loan cost in terms of interest payable. Once you apply to be deducted higher EMIs, the repayment tenure reduces, reducing the overall interest against your loan.
Consider Transferring your Home Loan Balance
You may get a home loan and later realize that the lender’s interest rate is less favorable than other lenders. If your lender doesn’t want to review your home loan rate, you can transfer your loan balance to another lender with lower interest rates. Such transfer reduces the interest payable at the end of loan tenure or the loan liability, relieving your financial burden.
Make a High Down Payment
Many lenders will finance up to 75% or 90% of your property’s total value. Then, you’re expected to pay the remaining cost of the property. Making a more significant down payment lowers the loan amount you receive from the lender, which reduces the interest you’ll pay.
You may also make regular prepayments when you get extra income or a work bonus, which lowers the principal loan, reducing the total interest levied on your loan. The EMIs you pay for PNB home loans or other lenders cater to the principal amount borrowed and interest of the loan.
At the start of loan repayment, more of what you pay goes towards the interest charged and less towards the principal. Therefore, making part payments will reduce the principal amount and save you some payable interest.
Switch to Floating Interest Rate from Fixed Rate
If you take a home loan on a fixed interest rate, you will pay more interest during the loan tenure. The interest payable for a fixed rate is 1% to 2% higher than the floating interest rate. Therefore, if you got your loan at fixed terms, you can switch to a floating interest rate and save money.
The small amount you save from the cost of loan matters a lot. After taking a loan to finance your home buying, you can use these tips to reduce the interest rate. That relieves the financial burden you face to fund the EMIs and other needs. Before taking a PNB home loan, research and get the right lender with competitive and favorable terms.
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