Hello friends, have you also taken a home loan to build your new house? If you are also paying EMI of your home loan, then today we have brought something new for you. Today I will tell you in this article that if you have taken a home loan and you want to reduce your EMI, then you can reduce your EMI with these 5 ways. Today we are going to give you complete information in this article, so read this article till the end.
If you have also taken a home loan and want to pay less interest on the loan, then you have to keep some things in mind. Here we are going to tell you five such ways by using which you can reduce your interest rate.
Reduce Home Loan EMI with these 5 ways
When we take a home loan, we pay it for a long time. We take home loans to build our dream home but the interest on home loans is very expensive in terms of the amount. So whenever we take a home loan to buy a house, we pay it in installments for a very long time and this can be financially tiring for you, as you have to pay EMIs regularly from your salary.
If you do not pay EMI regularly, you are charged a penalty. Home loan interest increases your financial burden. If you want, you can reduce the EMI of your home loan, that is, the amount you pay as interest can be reduced. For this, you have to take care of these things.
Prepayment of loan
If you want to pay less interest on your home loan, you need to prepay the loan. Prepayment reduces the principal amount and reduces the interest. But before doing so, make sure that your bank or home loan provider does not charge any penalty or fee for free closing. Most banks do not charge any fee for free closing, but you must check about it once.
Do not opt for a long term loan
Banks offer long term home loans. Banks give you more time to repay the home loan but you have to keep in mind that you should not choose a long term home loan because you may have to pay higher interest rates to pay the loan. If you take a long term home loan, then your interest rate also increases.
increase ammi if possible
Hello Hello If your financial situation is stable then you can increase your EMI by 5% every year. By doing this your interest amount gets reduced. One thing to consider before this is to estimate your financial situation and requirements, then calculate the home loan EMI. Also think about salary intelligence or annual bonus. If you have made your financial estimate correctly, then you can calculate and increase your EMI. Keep your EMI amount small at first but increase it later so that it can have a bigger impact in the long run.
Choose banks with low interest rates
You have to go to the market and ask every bank how much interest it gives on home loan and when does it increase the interest rate. You have to get complete information about the interest rate and after that you have to decide which bank gives you low interest rate and if you are taking loan for a long time then you have to do complete calculation about which bank charges how much interest rate, after that you can think of taking a home loan.
Consider increasing your down payment amount
Whenever you buy, you usually have to make a down payment of at least 20% of the total purchase price. If you are taking a home loan, then try to make the maximum down payment. This can reduce your interest rate, which can help you get a lower interest rate and your EMI will also be reduced and your loan will be over soon.
Reduce Home Loan EMI Amount
Stepping into your dream home is an achievement that brings immense joy. However, the accompanying home loan EMI can sometimes feel like a financial burden. But fret not, there are innovative ways to lighten this load. In this blog, we will answer your question of how to reduce home loan emi by exploring various strategies and techniques to reduce your home loan EMI and make your homeownership journey smoother than ever before.
1. Refinancing and Home Loan Interest Rate Reduction
One of the most effective ways fo of an existing home loan is by refinancing your existing loan. Keep an eye on the current market trends and the interest rates offered by different lenders. If you find a lender offering a lower interest rate than your current one, consider refinancing. A lesser interest rate can significantly reduce your monthly EMI, allowing you to save a substantial amount over the loan tenure.
To get an idea of how refinancing can affect your EMI, you can use thending loan balance, the tenure, and the interest rate to give you a precise estimate of your new EMI amount after refinancing
2. Increase the EMI Amount
While it may sound counterintuitive, increasing your EMI amount can actually help you reduce the overall cost of your home loan. By paying a higher EMI, you reduce the principal amount faster, which, in turn, reduces the interest payable. This strategy can help you reduce home loan tenure, ultimately saving you money in the long run.
Before opting for this method, ensure that you have the financial capacity to commit to a higher EMI. It's important to strike a balance that allows you to comfortably meet your monthly obligations while accelerating your loan repayment.
3. Make Partial Prepayments
Another effective way to reduce your home loan EMI is by making partial prepayments whenever possible. Whenever you receive a windfall, such as a bonus or an unexpected financial gain, consider using a portion of it to make a lump-sum payment towards your home loan principal. This reduces the outstanding loan amount, which, in turn, lowers the EMI.
Keep in mind that some lenders may charge a nominal fee for making prepayments, so it's essential to check the terms and conditions of your loan agreement before proceeding. Making periodic prepayments can significantly reduce your overall interest payout and help you close your loan sooner.
4. Opt for Longer Loan Tenure Initially
When you apply for a home loan, you can choose the loan tenure. While opting for a longer tenure initially may result in lower EMIs, it provides you with flexibility. You can always choose to reduce the tenure later when your financial situation improves.
By starting with a longer tenure, you have the freedom to switch to a shorter tenure without any change in the EMI amount. This strategy can help you adapt your loan repayment to your evolving financial circumstances, allowing you to make higher EMIs when you can afford them and lower EMIs when needed.
5. Utilize Home Loan EMI Calculator
is an invaluable tool that helps you plan and manage your home loan effectively. Using this tool, you can experiment with various loan tenures and interest rates to see how they impact your EMI. It provides you with a clear picture of how different parameters affect your monthly EMI amount.
Additionally, the calculator can help you determine the ideal EMI amount that suits your budget and financial goals. It's essential to use this tool before taking out a home loan and periodically during your loan tenure to assess whether any adjustments are needed to reduce your EMI.
6. Opt for a Step-Up or Flexi EMI Plan
Some lenders offer specialized home loan schemes such as step-up or flexi EMI plans. These plans are designed to cater to borrowers with increasing income potential. In a step-up plan, the EMI starts lower and gradually increases over time, aligning with your income growth. On the other hand, a Flexi EMI plan allows you to increase or decrease your EMI amount as per your financial situation.
These plans provide flexibility in managing your EMI commitments and can be an excellent way to reduce your EMI burden without straining your finances.
7. Save Money via SIP
Investing through a Systematic Investment Plan (SIP) in equity funds is a fruitful manner in which you can save a significant amount of money every month, which can further be used to foreclose the loan. Saving around 10% of your EMI amount in a SIP throughout your home loan tenure will give you a good lumpsum amount that is sufficient to clear off a portion of your debt.
Reducing your home loan EMI amount in 2024 is achievable with the right strategies and financial planning. Whether you choose to refinance, increase your EMI, make partial prepayments, opt for a longer tenure initially, use an EMI calculator, or explore specialized EMI plans, it's crucial to align your approach with your financial goals and capacity.
Remember that every borrower's situation is unique, and what works best for one may not be suitable for another. Therefore, it's advisable to consult with a financial advisor or mortgage expert to tailor these strategies to your specific needs. With careful planning and disciplined financial management, you can easily reduce your home loan EMI and achieve your homeownership dreams.
