Home loans are an efficient way to secure the required funds for house property purchase. However, even though the housing loan interest rates are affordable as compared to several other types of loans, such repayment creates a financial strain in the long run.
Therefore, you can adopt these ways to save money –
Take measures that help improve your credit score– A high credit score suggests to lenders that you can handle your credits responsibly and make timely repayments and helps negotiate for competitive home loan interest rate. You must, therefore, take measures like making timely repayments, applying for rectification in credit history errors, maintaining a low credit utilisation ratio, etc. for credit score improvement.
Make higher down payment – You can also put down a sizeable down payment amount which will, in effect, lower your loan principal via a high LTV. Accordingly, the home loan rates will also be reduced which will help you save substantially.
Opt for a suitable interest rate – There are two types of interest rates – fixed and floating interest rate. While the former remains the same throughout a loan tenor, the latter changes as per market trends. Also, a fixed interest rate is always marginally higher than the floating rate. You must, therefore, compare the two to select the best interest rate option.
Know about associated charges – The associated fees and charges can also increase the overall cost of the loan. Therefore, one should always learn about the fees and charges before applying.
Tax benefits –One can avail exemptions on the home loan principal and interest amount under section 24B and 80C of the Income Tax Act for increased savings.
Balance transfer –You can also refinance your home loan balance from your existing lender to a new lender for a better current interest rate for home loan, reduced tenor, etc.
Make partial payments – Borrowers can also make part-prepayment of their loan amount to save considerably on interest payment.
Borrowers, however, should read through all terms and conditions carefully before applying.
