Paying home loan EMIs? This is how you can save money - Follow these TOP TIPS
Paying a home loan is not only a costly affair but it is also a serious one.
Paying a home loan is not only a costly affair but it is also a serious one. Since the installment of a home loan amount is usually high, the interest payable on them can add a bigger burden. However, It doesn’t mean that there are no opportunities available to save money. Home loan repayment is a goal for lakhs of individuals across the world, as it would set a success point in their life in terms of financial freedom. Home loan is also a major debt among the population which is by far the most common type of loan a person takes in his lifetime.
Repayment of home loan is a lengthy process and EMIs are set for longer duration, basically 10 years or more. To repay a home before its time period can also be a costly affair due to the interest fluctuations and individual bank policies. However, repayment of a home loan earlier than scheduled comes with a lot of benefits. Amit Gupta, MD at SAG Infotech shares his knowledge to suggest some of the TOP TIPS to save money when you are paying your home loan:-
"Pay in Advance:
Paying your loan in advance can help reduce the amount of your total interest payable significantly. Although it can be achieved only with a great deal of financial discipline and commitment, it will have long-term effects that can outweigh the struggle to save more for the timely payment. Meanwhile, one should also consider the prepayment charges, and some other charges that can be applicable while pre closing your home loan.
Ask to lower the interest rate:
Talk to your bank and try to negotiate the interest rates. If you are associated with the bank for a long time, most banks will accept your request. This will definitely help you save a significant amount on interest payable. However, it also depends on the loan amount.
Research before applying for a loan:
Research is important before making any kind of investment. If you are planning to apply for a home loan, do your research beforehand. It is possible that two or more banks may offer identical interest rates, but take a look carefully, maybe other fees and charges may differ. Without proper research, you will blindly choose a home loan plan and in this way home loans can become more expensive. In this digital world, all the important details are already available online so you can compare home loans and choose the best out of them.
Invest before applying for a loan:
The higher the amount paid for the down payment, the lower the loan amount. And the lower the loan amount, the lower will be the interest applicable on the loan amount. Thus, start saving in advance or invest your money in various schemes so that you can pay a bigger amount as down payment for your home loan. In this way, the bigger the down payment is, the fewer the installment amount and lower the interest amount will be.
Change the Bank if you find a better option:
Yes you can. This process is known as “Home loan balance transfer” and it is a process where a bank will take a home loan under its hood from an existing bank. If you find a bank that offers you a low interest rate on a home loan, you can transfer the Balance of Your Home Loan. This process can help you save the interest amount during the tenure of the loan. Availing home loan balance transfer is a straightforward and effective process to save more on interest.
Home loans are expensive, but all the above tips can help you in saving some money on the payable interest. Financial commitment plays a big role in saving some extra on a home loan. However, it needs to be always kept in mind that paying off your home loan in part or in full can also help you save more.
Prior preparation like investing to make a larger down payment is the most effective tip to save a big portion of interest on a home loan. It will reduce the total interest that needs to be paid on the loan. Also, it develops a discipline and habit to save money on every investment in the future."
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.