Home loans are a suitable financing option for individuals who require funding for the purchase or construction of a house. However, high interest rates can increase the overall loan instalment amount, which can be financially burdensome for borrowers.
Hence, borrowers can adopt several measures, such as using a home loan EMI calculator, to reduce loan instalment amount. Some of them have been mentioned below -
Home loan refinancing –
Borrowers who have already availed a home loan and are currently paying high interests on the same can consider opting for a home loan balance transfer facility. In this process, borrowers can switch their outstanding amount from their current lender to a new financial institution offering a home loan at a lower interest rate. Such a lowered rate will consequently result in loan instalment amount reduction.
Choose a suitable type of interest rate
Borrowers who are paying the loan at a fixed rate should consider switching to a floating interest rate if the market shows a trend of home loan interest rate cuts. Accordingly, they can reap the benefits as and when RBI lowers the repo rate, a key commercial lending rate that is directly linked to the floating rates offered by lenders to customers.
Compare lenders
Borrowers can also use online tools like a home loan EMI calculator to compare loan offers by different lenders and compute the loan instalment amount that will fit their repayment capacity.
Additionally, increasing the down payment amount also helps to limit the EMI amount as it results in lower loan value and a reduced total repayment liability.
Apart from that, borrowers with a positive repayment history can also consider negotiating with their lending institution for low rates of interest resulting in home loan EMI reduction.
