A home is a dream of the common man. It is also one of the most important aspirations that many people strive toward in their life. But buying a house or building one is undoubtedly a costly affair. This pushes most individuals towards borrowing money from banks and/or money lending institutions in the form of home loans.
But home loans come with their fair share of burdens, such as timely repayment of money in the form of EMIs and a certain rate of interest that the borrower must pay on the sum of money he has borrowed as a home loan. Many people are quite sensitive when it comes to owning a home and ensuring that they remain debt-free and work on reducing their financial burden. But it is easier said than done. Especially when it comes to a home loan where the repayment amount is considerably high. Hence, it is always important to plan ahead of time and also save some money in the process of home loan repayment.
If you are still worried about how to go about saving money and repaying your home loan, we are here with some tips and strategies to make the process easier for you. So you can consult with the best builders in Chennai to buy a house without worrying about losing extra money and still own your dream home.
Conduct your research
Even before you start visiting the best builders in Chennai in search of a house for sale in Ayanambakkam or want to look at villas in Mogappair, you need to do some research on the home loan you are to apply for buying the property. Check and compare the rates of interest offered by various banks and money lending institutions. Make sure to consult with housing finance companies and find out the best rate that works for you so that you will not be left with any regrets about having to pay extra money.
When researching, you will find that many leading banks and NBFCs have similar rates of interest. So you also need to tally the processing fee and other charges that you have to pay when you are borrowing money for a home loan. Simply opting for a lower rate of interest might not be the best option for those who are trying to save some money on home loan repayment.
Don’t hesitate to negotiate with your bank or housing finance company
While there is no guarantee of being successful in your negotiation, if you are someone who has been associated with a bank for a very long time and also maintains a good credit score, you may try to request the relationship manager or any senior manager from the branch and try to reduce your rate of interest. This may not be entirely successful, but they may offer you the best rate possible.
In case the rate of interest is non-negotiable for your home loan, you might be offered other products based on your banking relations. But if things work in your favor, you will be able to save a hefty amount on the home loan repayment and rate of interest.
Prepayment of loan
Opting for a longer repayment period on home loans is a common practice among people as they try to reduce their EMIs. But one should also remember that a longer repayment period means paying higher rates of interest. Hence, when you are consulting with the best builders in Chennai and looking for a home, remember that prepaying the home loan will not only reduce your outstanding principal but will also reduce the burden of interest to a considerable amount.
You can prepay your home loan in part or in full and according to experts, the latter would be a wiser decision. Ensure to confirm the charges of prepayment with the bank and then calculate the entire amount you are going to save after considering the tax benefits that come from home loans.
Make a big down payment
When your down payment is a sizable amount, you are awarded a lot of benefits such as increased creditworthiness, and lowered principal and you will be able to save money on interest and lower your processing fees. One of the most important advantages of making a large down payment is the lowering of your EMI burden and the principal amount. But to make a large down payment, you need to start saving money in advance. There are many diversified equity schemes, both on a short-term and medium-term basis which can help you achieve your goal.
In cases where your existing lender refuses to lower your interest rates, or you find yourself to be dissatisfied with the services provided by your current lender, you can think of a home loan transfer. Look for another bank or company that offers better interest rates and services. Then you can transfer your outstanding loan. This process of transfer is quick and easy but you need to do proper research before choosing another lender so you can get the best rates while transferring the balance.
However, if you have already managed to clear a major chunk of your loan, then considering a balance transfer might not be the best solution for you. This is mainly because of the processing fee and other related charges you will be required to pay to the new bank. It might end up costing you more than your savings in the interest rate.
Home loans are expensive, but if you follow these above-mentioned tips, you will surely be able to save money while repaying the home loan. But always do your research before applying for any loan to avoid unpleasant surprises in the future.