Planning to go for a home loan when investing to buy a property for yourself? The smartest way to complete your dream of buying a home is through home loans without digging into much of your savings. Repaying a home loan is always a lengthy and tedious process. This will probably make the biggest financial commitment in your life.
Here are a few tips to decrease your home loan interest while repaying your home loan.
Preferably, an individual should begin prepaying some amount from the main year of the loan itself. Prepaying later does not spare much as far as interest payment is concerned. Banks don`t charge any pre-instalment penalty on drifting advance and the base measure of prepayment needs to in any case two months of EMI. Banks will acknowledge prepayment in the case that it is done from possessing reserves and as proof will request half year`s bank statement. However, one ought to repay the advance in the wake of keeping in mind sufficient emergency funds. On the off chance, if that is not done, at any point if there is an emergency in the family, the individual may need to take an individual loan, which charges a lot higher rate than a home loan. Additionally, if the person finds an alternative investment choice where the rate of return is more than the home loan interest rate, at that point it is smarter to invest and earn higher returns.
One of the smartest ways to repay your home loan before the tenure ends is to pay slightly higher EMIs, by doing so you will be able to save a significant number of months or years depending upon the amount of loan you have taken or your loan period. You can request for an increase in EMI at any point of time and there are no extra charges for this. The person has to just submit a fresh Electronic Clearing Service (ECS) mandate to the bank for the new EMI. For a person who is on his salary, an increase in EMI will help him progress in his career, higher pay packages will eventually result in higher income for them. They also use their annual increment to step up the EMI amount and prepay the loan sooner.
Continue paying attention to lower interest rate offers. Before finalizing for a home loan, ensure that you do proper research and pick the financer offering the most minimal loan fee. On the off chance that you have effectively taken a home loan and need to decrease the interest cost now (as a rule banks don`t pass on interest rate cuts to the current borrowers), at that point go for another bank/money related establishment who may be eager to offer you a loan at a lower interest rate. Consequently, renegotiating your home loan at a lower financing cost can demonstrate to be an extraordinary choice to reduce your interest repayment budget. Remember to consider the charges for exchanging the advance, for example, processing cost, legal expenses and so on before proceeding with it.