With the Covid-19 induced lockdown affecting cash flows, making regular loan payments has become challenging for many people. For those who have taken home loans where the EMIs are high, this challenge becomes tougher. As a borrower, if you are looking for ways to make your home loans easy by reducing your EMI payments, follow the tips given below.
Change your lender
While taking your loan, you might have chosen a lender who offers a high home loan interest rate. If you have now found a new lender willing to offer significantly lower interest rates, consider changing your lender mid-loan. Even if you do not find a lender with a lower home loan interest rate, you should seek one willing to extend your repayment tenure. Before you change lenders, use an online home loan EMI calculator to know precisely by how much your EMIs can go down.
Changing lenders is extremely convenient, and all you need to do is approach your existing and new lenders and request for a loan balance transfer. Refinancing your housing loan at a lower interest rate is one of the easiest ways to lower EMIs.
Pre-payments help
Loan pre-payments previously came with a lot of fees. Recently, however, most banks and NBFCs have stopped taking pre-payment fees, allowing borrowers to repay vast sums of their home loans before the end of tenure. If you wish to lower your EMIs and the amount of interest charged, prepay your home loan online or offline at the beginning of your repayment tenure.
Make a bigger down payment
A higher down payment reduces the principal loan amount, which means that the interest payable and the EMI charged automatically reduces. If you have any extra savings you can use to make a significant down payment while applying for a home loan, do not hesitate from doing so.
Choose longer tenures
If no other option works for you, extend your home loan tenure. With a longer loan repayment tenure, you will have to pay more interest, but your EMIs will significantly come down. Negotiate with your lender to extend your repayment tenure. Determine the exact amount of interest you will pay by using a home loan EMI calculator before making this decision.
Before you choose a lender, read the home loan eligibility criteria imposed by your lending institution on tenure extension, refinancing, or prepayment. Use clever financial planning and pounce on opportunities for interest or EMI reduction whenever possible. However, be wary of EMI reduction methods that demand higher home loan interest payments. With adequate planning, you can easily apply for a home loan with reduced housing loan EMI burden and keep your savings safe for emergencies.
Source: Tax Guru
