You are planning on buying a flat from the best builders in Chennai, but you also want to reduce the interest you pay on home loans. In this blog, we have covered all the essential things you would like to know in order to minimize the rate of home loan interest. If we dig a bit deeper into the topic of owning a home, it is one of the most common aspirations of people and also one of the biggest financial decisions that an individual has to make. In order to turn this dream of owning an apartment in Ayanambakkam made by the best builders in Chennai, people often take the help of home loans.
People who have the financial power of buying a house without a home loan can opt for a well-managed loan to make their life easier and achievable. There are also many tax benefits of opting for a home loan but one can end up with more EMIs that are higher than home loan interest rates.
But there are many ways to reduce home loan interest rates. Here we have listed all the fool-proof methods that will help you to ensure that you don’t have to pay high home loan interest and you don’t end up burning a hole in your pocket.
Maintaining a good credit score
How you deal with borrowed money is reflected by your credit score. Any score over 750 is considered a good credit score and suggests that an individual is financially fit. If you are financially fit, then you will be deemed a reliable borrower for lenders and it will fetch you better interest on home loans.
Having a bad credit score implies missed payments or late payments. So in order to keep a track of your credit score, you must keep track of all your payment history, and how much money you are owing to the lenders. You also need to keep the track of your payment history, how much money you are owing, the length of credit history, new credit, and various types of credit that you are using.
Try to make a bigger down payment, and reduce the total amount of the loan whenever you are buying a house anywhere in Chennai or apartments for sale in Ayanambakkam, it is always better to have a planned approach. There are always ways to work towards putting down a larger down payment and then getting benefits from the lesser loan amount that will be leading to a significantly lower interest.
Whenever you are opting for a home loan, any bank or institution will finance 75% to 90% of the total value of the property, however, it depends on the eligibility of the borrower. So you can plan according and consult with the best builders in Chennai and make sure you borrow less and then lessen the amount of interest paid.
Shorten the loan tenure
Your loan tenure will dictate how much amount of interest you are going to pay. While the EMI may go down for a longer tenure, in the end, you will be paying more in the form of interest.
But if you are choosing a shorter tenure for your loan, the EMIs will be more but the overall interest that you pay will be coming down a lot. So borrowers must always be careful while choosing a tenure they are going to avail a home loan.
Comparing interest rates online
Before you finalize on a lender, you need to do thorough research and conduct a comparison of rates. There are so many third-party websites that will provide you with comparisons and provide you with a clear picture of all the different charges that will be levied on the loan.
It is the ideal way to get an in-depth knowledge of the interest levied by all the banks before you choose your lender. Customers with a good credit history are also preferred by banks. Credit scores that are anywhere near 800 have good chances of getting better interest rates.
Opt for a floating rate of interest on the home loan
With a floating rate of interest, the rise and fall of the rest of the market can be a good thing as opposed to a floating rate of interest.
For this reason, some borrowers find it appealing to opt for a lower rate of interest and this means more savings every month. If there is a case where the floating rate of interest exceeds the fixed rate of interest. But borrowers do not need to worry that such conditions are only temporary. This will not have any impact on the entire loan tenure.
Make sure to clear your prepayments regularly
One of the sure-shot ways to make sure that there is a reduction in the total rate of interest is to make the prepayments on time.
In the initial stages of the loan, you are paying towards the interest and not much towards the principal amount. In case there is any raise in your salary or you receive a hike in your salary, you will be able to make prepayments and reduce the principal and hence the interest as well.
Revise the EMIs every year
When it comes to certain lenders, EMIs can be revised annually. So with a salary hike or the lender getting a consistent rise in the income, you can choose to increase your EMIs. This might seem odd at the beginning but the higher your EMIs, the shorter the tenure. So there will be a significant reduction in the rate of interest.
Buying a house is a huge financial decision for most people. With these tips and tricks, we hope you will be able to reduce your home loan interest.