Getting a home loan is an efficient solution to manage the overall cost of buying a property. But it is extremely important that you strategically plan your EMIs. Only then, you can expect to manage your loans without facing financial struggles during the tenure period.
One of the biggest aspects of home loans is the associated interest rates. Your housing loan interest rate is what makes you smart or foolish. Keeping the interest rate low is a smart choice for every home loan seeker.
Hence, this article presents you a few valuable tips that will help you reduce the interest rate on your home loan.
- Plan your loan repayment
You need to plan the repayment method before you are availing the loan. Your repayment strategy should decide the interest rate you pick for the loan. This is the right approach if you want to avoid struggles in the future. Make sure that you plan a quick repayment. Try to cover the principal amount as fast as possible. This way, you can reduce the interest rate on loan.
- Select loan tenure wisely
When you want to keep the interest rate under control, you need to keep the loan tenure as low as possible. But remember to not go for too short tenure periods, or it will become difficult to cover the loan. You want to repay the amount faster, but don’t want to make it a financial crisis for yourself.
This is why you need to find a balanced tenure period that suits your financial condition and keeps the interest rate low as well. Many people take the longest possible tenure, which makes them restricted in terms of their financial situation.
- Try to increase EMI every year
Many smart people increase their EMI year after year. Which becomes a great move to comfortably reduce the interest rate burden on your head. You can also decide a certain percentage of the EMI that you can increase every year.
While planning, consider your annual income, bonuses and other ways you get money. Then, see how much annual expense you have to manage every year. With that, you should be able to get a clear idea of what percentage would be best to increase on home loan EMIs.
- Consider refinancing with a better interest rate
If you have already taken a home loan, then refinancing is a logical move to reduce the interest rate. You need to research and find out about the loan providers who are ready to give you better interest rates on loan. You can shortlist such options and choose one to refinance your loan with a much better interest rate.
To sign off, remember that you need an interest rate and EMI that is suitable for your current financial situation. However, think about the future as well, as you have to manage the repayment for a while. Keep all the given tips in mind and take appropriate actions. This should help you keep the interest rate on your home loan under control.