A home loan is a long-term commitment, and if not repaid on time, can impact the borrower’s credit score. So, one should carefully plan the repayment schedule and make necessary planning to ensure a smooth and timely repayment.
Borrowers can take the help of an online home loan interest rate calculator to estimate the monthly payment and total borrowing cost. Notably, to minimise the loan burden, one can opt for a few ways to reduce the overall home loan interest amount.
4 Tips to Reduce the Home Loan Interest Payable on A Home Loan
- Opt for a short tenor
In a longer tenor, borrowers end up paying more interest although the monthly EMI payments are comparatively lower. On the other hand, opting for a short tenor can help to reduce the total interest burden but it can increase the EMIs. Borrowers should access an online home loan interest rate calculator to choose a suitable loan tenor. This will help to make an informed financial decision.
- Make a higher down payment
A down payment is a percentage of the loan amount that a borrower needs to pay upfront. A higher down payment directly impacts the principal amount and house loan interest rate. When a borrowers make a higher down payment, the loan principal amount decreases, thereby reducing the total interest paid. As a result, one has to pay lower EMIs.
- Make regular prepayments
It is one of the most effective ways to reduce the interest payable on a home loan. While making a prepayment on a home loan, there is a substantial reduction in the interest component. Thus, when an applicant uses their salary hike, work bonus, etc., to make prepayments, the principal amounts get repaid faster, lowering the total interest burden and the EMIs of a home loan.
- Opt for a balance transfer
A balance transfer is another aspect that can help reduce a home loan’s total interest payable amount. When a borrower opts for this facility and considers refinancing their home loan, it is likely to reduce the home loan EMIs. However, one should follow these tips for refinancing their home loans.
Though, before opting for such a facility, it is necessary to consider certain aspects like associated charges and weigh in the benefits. In addition, one should be aware of the documents needed for a home loan balance transfer.
Apart from the tips mentioned above, one should also consider maintaining a higher credit score as it offers the leverage of negotiation. In such a case, borrowers can convince their preferred lenders and secure a competitive interest rate, which will further help in lowering their total interest payable.
A Step-by-Step Guide on How to Calculate EMI Interest
Using an online home loan EMI calculator is comparatively easier than performing manual calculations. Borrowers can get the precise result by putting in only three inputs; here are the steps to use this financial tool:
- Visit the lender’s official website
- Navigate to its EMI calculator
- Enter the tenor, loan amount, and interest rate
- Get accurate results instantly.
Thus, by providing inputs like principal amount, loan tenor, and interest rate, one can quickly check their monthly instalments. That being said, using this home loan interest rate calculator allows individuals to plan their finances accordingly.
Benefits of Using A Home Loan EMI Calculator
Here are some of the notable benefits of using this financial tool:
- The application of this EMI calculator is straightforward and user-friendly.
- Performing manual calculations to find monthly home loan instalments always leaves room for errors and can adversely affect in financial decision-making. This online tool ensures accuracy and help potential borrowers with their loan repayment.
- Lastly, home loan interest rate calculators do not entail any kind of additional charges and are available free of cost on the lender’s website.
Besides free access to the online EMI calculator, various reputed lending institutions and NBFCs provide pre-approved offers. These offers are available for financial products like loans against property, etc. Individuals can check their pre-approved offers by providing requisite details, such as their names and contact numbers. These offers can help streamline the loan application process.
Borrowers looking to reduce their home loan interest burden can opt for these ways to reduce the loan liability.