How to Get Lower Interest Rates on Home Loans?

Buying a house is almost everyone’s dream. But it is a significant investment too. It requires a large sum of money. Hence, many opt for a Home Loan. It assists them in purchasing a house effectively. It provides the necessary financial support at economical interest rates.

But it is a little-known fact that you can reduce your Home Loan interest rates considerably. By considering a few aspects, you could save up on such costs in a strategic way. Want to know more about them? Consider these tips:

1. Opt for a shorter tenure

Choosing a longer loan term attracts higher interest rates. Although it gives you ample time to repay the borrowed amount, it increases the interest rate by a significant margin. Hence, opt for a relatively shorter tenure. You could even use a Home Loan EMI Calculator to arrive at the appropriate Equated Monthly Installment within your budget. It will help you shorten the term efficiently.

2. Stay consistent with your prepayments

To enjoy the lowest Home Loan interest rate, be consistent with your prepayments. This includes your payment towards the levied interest. So make strategic use of all your bonuses, salary hikes and income to manage these charges. It will help reduce the principal loan amount and the total interest.

3. Increase your down payments

Most banks and financial institutions fund 70% to 90% of the total value of your house. The remaining amount you need to pay. Hence, you should try to increase the latter percentage to dodge high interest rates. For example, you could ask for the least available amount offered by your lender to negotiate for a lower rate of interest. It is best to pay from your pocket than to bear unnecessary costs.

4. Revise your EMI payouts

Sometimes, lenders allow you to revise your EMIs annually. Hence, it would help if you considered increasing the amount, especially when you get a salary hike. For example, for every 5% increase in your income, you could increase your EMI payment by 2.5%. This way, you would effectively lower your Home Loan interest rates.

5. Refinance your Home Loan

If your interest rate is high, opt for refinancing your Home Loan. Opt for a loan balance transfer or a change in the scheme. For the former, you would have to transfer the remaining principal amount to another lender, offering lower rates. Also, note that this option should be your last resort. This is because it involves a lengthy procedure.