5 ways you can save money on home loans
'Disclaimer: This story is for informational purposes only and should not be taken as investment advice.'
If people had their ways, they would never take loans. After all, who wants to pay interest. But reality is that prices of real estate are beyond most people's reach and hence, people do need to take loans to buy their dream homes.
Home loans run into several lakhs and in many cases, crores. So even if there is a small chance of saving even a small percent somewhere, it means savings lakhs during the full tenure of the loan.
Here are 5 ways in which you can save money on home loans that recommended by Tata Capital:
Check and leverage your CIBIL score
Lenders might tell you that your credit score is not good and hence, they cannot offer you loans at low rates. But you can counter them if you have already checked your CIBIL score and found it to be satisfactory. So make sure to check you CIBIL score before applying for home loan. Lenders give loans at lower interest rates to those who have high CIBIL score.
Look for options
Do not go and take loan from a bank where you have your savings account. Many lenders are ready to offer better rates and borrower friendlier terms. So visit multiple lenders and evaluate their basic offers. It’s possible that you might get a loan offer which is much better than what your long-time banking partner is offering.
Make higher down payment
Lenders generally ask borrowers to bring in 15% to 20% as down payment. But that doesn't mean that you cannot make a higher down payment. Making a larger down payment substantially reduces your EMI burden and helps save a lot of money as interest. So try to make the highest possible down payment that you can.
This factor is underrated by most. Most people think that whatever the lender is offering is the final deal but that is not the case. All terms and conditions are negotiable even the rate of interest. So if your loan application has been approved and you have a high CIBIL score, make sure you negotiate hard with the officials to get a good deal. After all, it’s your hard earned money which you will be paying.
Switch your loan to another lender
If you already have a home loan running, then it’s possible that other lenders might be ready to offer you loan transfers at lower rates. So look out for such offers. It is possible that even after considering processing and loan transfer charges, the offer by new lender might be more cost-effective for you in the long run.