Home loans are loans used to buy the house you want. It assists the buyer with funds to buy the house of her/his dreams. But it is also the biggest liability for the person in her/his lifetime. The tenure for which the loan is taken is the longest among other loans such as education loans, auto loans, business loans and personal loans. You have to pay the EMI of the loan for the longest period. You can even calculate your EMI on a home loan EMI calculator. But there are 6 ways you can reduce the EMI of the existing home loan.
Transfer your loan to another bank or financial institution:
After taking a home loan from the bank or any other financial institute you might not pay much attention to the interest rate and EMI of that bank or financial institute. In which case you can shift to any other bank or financial institute. There’s no penalty in shifting your loan from one moneylender to another. The moneylender will charge his basic fees but that’s all. So if you find your bank not competitive with the rate of interest and EMIs you can shift to any other money lender.
Shift from fixed loan to floating loan:
Once you take a home loan which is a fixed loan you will have to pay a fixed rate of interest and EMIs. Usually, the rate of interest and EMI for fixed loans is 1% to 2% higher than the normal rate. In order to be charged less EMI and interest rate. So before buying the home loan choose the floating loan. In a floating loan, you will have to pay a lesser rate of interest and EMIs. Hence always choose a floating loan over a fixed loan. You may even switch the fixed loan from the floating loan. You can switch to a floating loan from the same money lender or a different money lender. Although, you may have to pay a penalty but you will still be at a benefit. If you go for a fixed loan make sure that the interest rate and EMIs are really low as compared to the previous rate of interest and EMIs.
Partial repayment and EMI adjustment:
If you have a floating loan you have much flexibility in the way you repay your loans. By making partial repayment you can reduce the tenure for your home loan. You can even bring down the principal amount of your home loan. After paying a substantial amount you can even ask the bank or financial institute to bring down the EMI.
Extend your tenure of the home loan:
If, suppose you have a lot of financial burdens and are unable to pay the home loan, you can ask the money lender to extend your home loan tenure. This will give you time and reduce the financial burden.
RBI offered loan restructuring:
You might find it difficult to repay the amount you borrowed as a home loan from the money lenders. One way of dealing with it is to opt for a moratorium. This way the EMI will also be waived off.
Interest rate regime:
It might be that you are following the old regime of paying the interest. It’s time you shift your regime to EBR-linked loans.
The bottom line:
You might be facing financial burdens after borrowing funds from a money lender as a home loan. But there are ways you can reduce the burden of interest rate and EMI. Check out Finserv MARKETS.