Owning a home is an important goal in a person’s life. But a lot of these goals remain unfulfilled due to various reasons, such as not having enough savings to pay their contribution, lack of access to financial support like home loan or household expenses along with the dreaded EMI.
Before moving ahead, let’s understand – What’s an EMI? EMI stands for Equated Monthly Installment. EMI is a combination of the proportion of the principal amount borrowed and interest charged on the borrowed amount.
In the initial years, the interest component has a higher ratio than the principal amount, and as the loan progresses, the ratio between home loan principal amount and interest rate reverses. You can calculate the estimate of EMI for your Home Loan EMI Calculator.
However, when you take a home loan, the interest rate payable on it and the tenure of the loan are the main determinants of the amount of equated monthly installment (EMI) you have to pay. To help you out, here are some quick ways for reducing your home loan EMI:
1. Choose Maximum Home Loan Tenure:
According to your age, ensure you opt for the maximum loan tenure available. This helps ensure that your loan obligation gets distributed over a higher number of months.
2. Increase Your Own Contribution In The Home Loan To The Maximum
Even though your housing loan eligibility is derived basis your repaying capacity, you can always opt for a lower amount by paying a higher own contribution, which will help reduce the overall amount and hence the EMI home loan.
The longer the tenure, the lower will be your EMI payable every month. However, you should only opt for longer loan repayment tenures if you think you cannot afford to pay higher EMIs. When you opt for a longer tenure, you end up paying more interest on your home loan outstanding amount. One should always calculate the tenure and corresponding interest rate options available to you before opting for a home loan.
4. New home loan borrowers
To reduce your home loan EMI, the first thing you should do is to choose a lender which offers home loan at a lower rate of interest. However, exploring how you can take a home loan, and from which lender, can be a daunting task. Also, at times you might not be able to figure out which lender is offering a better home loan deal.
5. Compare rates online
Nowadays, one of the best ways for home loan borrowers to check home loan offers is to go online. There are various websites, which offer an affordable rate of interest, fee, and other charges of different lenders. Hence, before availing a home loan, do your research to ensure you get the best deal.
6. Make a bigger down payment
As home loan lenders are allowed to finance up to 80-90 percent of the property’s value, those looking to avail a home loan have to contribute a minimum of 10-20 percent as a down payment. However, instead of arranging just the minimum down payment, it would be prudent to provide a higher contribution from your own pocket. But while trying to make a higher down payment, make sure you don’t overstretch your finances or hinder the achievement of other important goals.
These tips should help you reduce your financial burden and plan your finances better so you can live the life and lifestyle of your choice. Shubham Housing Development Finance Company helps you to plan your home loan.