Realizing the dream of being a homeowner is the best feeling anyone can experience. But, purchasing a property is not easy and things are not done only by paying an initial sum of amount. This is so, because, a large number of homebuyers avail home loan and the interest levied on this financial support mark the beginning of a roller coaster ride as the rise and dip in the interest rate directly affects the family budget. So, here are the tips to minimize interest rate despite of what this decided in the timely revision of the same by RBI [Reserve Bank of India].
- Opt for Home Loan for Smaller Period
The home loan with a smaller duration will increase the EMI value means you have to pay a handsome amount as Equated Monthly Installment. But, the interest rate is always calculated on the Principal amount and thus opting for a smaller duration of a home loan means paying-off the loan debt in minimum time and the interest rate automatically goes down as the lender receives a huge amount in a short span of time. The IR [interest rate] also diminishes with that of the deposition of the principal amount.
- Manage Budget & Pay Extra EMIs
Of course, paying an extra amount then what is determined for each month is a burden. But, it is better to deposit an additional sum of amount as EMI because it helps in a smart deduction of the principal amount. So, the interest rate gets lower when the calculation of paid and outstanding principal amount is made by the lender alias the bank. The listing of extra EMIs gives you the home loan borrower an upper hand for being punctual about paying EMIs and thus avail lower rate of interest on the same in future.
- Deposit Lumpsum Money
Plan the arrears or the appraisal amount you are about to get from the employer. We suggest you deposit this Lumpsum amount in the home loan account as the deposition of this amount directly cut short the principal value of the home loan and the interest rate also stays on the lower side due to this reason.
- Transfer Home Loan Lender
Gone are days when you had to stick with the same lender until paying-off the entire loan amount. Today, the home loan borrowers have the option to switch between the lenders. So, keep a track of interest rate and calculate the amount you are required to pay particularly after the revision of interest rates like [Repo rate and CRR] take place. Opt for the lender with a minimum rate of interest and pay less.
- Opt for Marginal Cost of Funds Based Lending Rate
The banks have switched to MCLR [Marginal Cost of Funds Based Lending rate] from May 2016 to calculate the interest rate. So, always opt for a home loan which fits into your budget and carry some amount of margin to pay the extra amount. Although, the MCLR is a step initiated by the banks to offer benefit the loan borrowers.