How to reduce Home Loan EMI: In order to control the rising inflation, interest rates are being increased by the central banks around the world. The Reserve Bank (RBI) suddenly increased the repo rate by 0.40 percent to 4.40 percent. (Remember these before you take out a loan to buy a house know which bank you have to pay for the interest)
After this announcement of RBI, loans were made expensive in some banks including Bank of Baroda, ICICI Bank, and IDBI. Which will have a direct impact on the monthly installment (EMI) of home loans, and auto loans. In such a situation, if you want to reduce your EMI in the era of expensive loans, then here are 5 such tips, which can help you.
Make prepayment as far as possible
The easiest way to reduce loan EMIs is to make as many pre-payments as possible. If you have savings in addition to your expenses, or you get a bigger fund from somewhere, then you can reduce your loan EMI by prepayment. In fact, whenever you make a prepayment, that amount is directly less than the principal amount. In this way, your monthly installment is also gets reduced.
Extend loan tenure
Many times it happens that monthly expenses are getting affected due to home loan EMI. In such a situation, if you are not able to get extra income or savings, then you can reduce the EMI by increasing the tenure of the loan. But, there will be a disadvantage in this that you will have to pay more interest.
Transfer home loan
Always compare interest rates while choosing a home loan bank. Get a loan from where you get a good deal. Many times it happens that you have taken a home loan from a bank, but another bank has a lower interest rate, so you can get the loan transferred. Always get the best deal and get the loan transferred whenever you get a chance.
Talk to a bank for a better rate
Banks sometimes offer extra relief in interest rates to customers with their good repayment track record and civil score. If you have a good record, then you can talk to your bank to get the home loan interest rate as low as possible. This will reduce your EMI.
Can increase down payment
While taking a home loan, try to make the down payment as high as possible. This is because even a higher down payment of Rs 1-2 lakh can reduce your EMI by Rs 2-3 thousand. Apart from this, interest is also saved.