The global pandemic has affected most of us in recent times and with salary cuts or job losses, it becomes even more crucial to be financially savvy and keep your debt to a minimum. If you have an existing home loan, you can soften the impact of future repayments by opting for home loan prepayment.
This convenient option can significantly reduce your principal as well as the total interest due, bringing down your home loan EMI and making future repayment more manageable. Apart from home loan prepayment, there are other ways in which you can reduce your home loan EMI and save more on your housing loan. All of these options, discussed in greater detail below, can help you make the most of the current home loan interest rate, which may be lower now than when you signed up for the loan.
Read on to learn more about home loan prepayment and other ways that make your housing loan more affordable.
Prepay your loan in part
Sometimes, you may end up saving a lot more than you usually do or have surplus funds in your account. This could be because of an annual bonus at work, returns from investments, an inheritance or the end of existing liability. In such instances, you can use these excess funds to reduce your outstanding housing loan amount by opting for home loan prepayment. This means paying an amount that is over and above your existing EMIs.
This helps reduce the principal balance and helps you save on the interest that is owed while reducing your home loan EMI. Use a home loan prepayment calculator to estimate your savings and forecast your future EMIs with ease. Frequent part-prepayments can also improve your credit score over time, as lenders view this kind of financial behaviour as responsible.
Switch your lender
If you have an existing loan with a high rate of interest, a balance transfer may be the best option for you to lower your home loan EMI amount. You can refinance your loan to make the most of a low current home loan interest rate with a new lender to make the repayment easier on your pocket. When you switch your loan, you must ensure that you meet all the new lender’s housing loan eligibility criteria as a balance transfer is considered a new application.
Use the home loan balance transfer calculator to estimate your savings and do a cost-benefit analysis to ensure you are saving money in spite of paying the required fees to switch your loan. Doing a balance transfer can also give you access to a top-up loan that you can use without any restriction on end-use.
Extend your loan tenor
Many lenders offer an adjustable loan tenor, helping you to extend your repayment period for better budgeted monthly payments. As a borrower, a longer repayment tenor will lead to higher overall interest but help you lower your home loan EMI. This is also referred to as restructuring your loan with your existing lender. You can check how increasing the repayment duration can help reduce your EMIs by using the home loan EMI calculator.
Whether you are reducing your home loan EMI by opting for home loan prepayment, changing your lender or extending your tenor, the end result should be greater financial freedom and easier management of funds. Use the various calculators to do this in a smart and informed manner and ensure you compare lenders and their rates when going the route of transferring your home loan to a new lender.
You can choose the best NBFC to reduce your home loan EMI by refinancing your existing loan at an affordable current home loan interest rate. You can enjoy a flexible and long repayment tenor along with a high-value top-up loan at nominal interest to address other expenses with ease. To get started, apply online from the comfort of your home.