It is a fact that homes are generally bought on finance from different banks and housing finance companies. These companies charge an interest rate against the lending. Customers, for repaying the borrowed amount, pay the applicable EMIs to the lenders over a fixed period of time.
Home loans are very beneficial for the property buyers, they not only help people to buy their dream home, but also help them to save on taxes. But to enjoy the borrowing process and to keep the whole tenure period smooth it’s very important to choose a right home loan. There are some ways by which you can save on your Home Loan.
Tips to Save on Your Home Loan
Pay off Your Loan Sooner
Paying off the Loan sooner not only save a lot of money but it will also help you to achieve your future financial goals more early and easily.
Achieving the target to pay off your loan sooner needs a proactive approach along with a disciplined financial life. This can only be done when you have the understanding of the benefits of doing this, which will ultimately help you to increase your saving towards your home loan preclosure. It is always the little things that count on. Try to find ways by you can save some and put that extra money into your home loan. This will reduce your loan amount and tenure too.
Negotiate on the Interest Rate
We all know that interest rate of every Bank is fixed and it may vary depending on the borrower’s eligibility and Loan amount. But you can talk with your lender to somewhat reduce the interest rates. They may get ready to reduce if you have a genuine reason. Suppose the reduced your interest rate from 9.25% to 8.35% by this also you can save a lot. So try it, it may work out in your favour.
Additional Charges to be kept in mind
When you apply for a home loan, you need to know about the various charges related to your home loan. Lenders add different charges to the current home loan schemes. They will generally add service and administrative charges or processing fees. These additional charges comes under the amount which is sanctioned on your name. So be aware of these things and check with different lenders before you finalize any deal.
Go for a SIP
Systematic Investment Plan or SIP is a smart mode for investing money in mutual funds in a smooth and hassle free manner. Under SIP you can invest amount at a regular interval which can be weekly, monthly or even quarterly.
In SIP, you can deposit a small amount every month or every quarter. The amount you invest can be as low as INR 500. If you go with a mutual fund scheme and then invest in a SIP. By investing in a SIP you can save on interest you have to pay in entire tenure period.
Let’s come to the Home Loan. Suppose you take a Home Loan of 30 lakhs for a tenure period of 20 years at an interest rate of 9.25% per year. For this particular home loan you will be paying INR 35,94,241 as the total interest amount and EMI will be 27,467. But if you invest 1000 per month for the same tenure period as that of your home loan tenure then here you can get approx. 30 lakhs at the end of 20 years as the interest you get on a SIP investment varies from 12% to 22%. You can use this amount to pay off your home loan. Hence, one way or another it can be said that it is a way to save on your home loan.
Home Loan Balance Transfer
Home Loan Balance Transfer is a process of transferring existing home loan into another banks or NBFC. This facility is taken usually if the borrower finds better services and lower interest rates at different bank. In order to opt for this all you need to do is just to fill the Home Loan Balance Transfer application form along with calculating savings on top up and home loan balance transfer. Balance transfer option is chosen by most people as it will lower the monthly installments by paying lower repayment amount. Helps in saving a lot of interest that can be used on other useful things. It offers attractive interest rates that will turn your home loan to be much easier to the pocket and affordable.
Home Loan Balance transfer does not just mean saving money, it also means one can make use of the same for investing in various other options. After-all having a home loan and owning a house is not the end of the journey. Balance transfer that is switching to another bank the outstanding loan amount may give the borrower better offers and services. There is no doubt that a balance transfer will definitely reduce the EMI payment, one –size will not fit everyone’s needs that finding the best one that suits your requirements is essential.
The burden of home loan can be huge for an average income salaried employee, but it is not the end of the road. There exist multiple options which can help in reducing the burden of home loan repayments. The money saved on the interest can be used for investments or a better lifestyle. The above mentioned can help you save up a lot of money and you can have the full ownership of your house much before the initial tenure. Make a well-informed choice to save big!
