How to reduce your monthly EMIs

Everyone wants a housing loan with the lowest EMI. However, home loan EMIs depend on several factors, including loan amount, rate of interest, and loan tenure, among others. Having said that, irrespective of whether you are a new or existing home loan borrower, you can reduce your EMI payments in various ways. Read on for tips to lower your EMIs through easy and effective ways.

For New Borrowers

• Compare Interest Rates Online: To reduce home loan interest, it is essential to opt for a loan from a lender offering the most competitive rate of interest. You can easily do so by comparing interest rates from multiple lenders. Many portals list home loan interest rates offered by different lenders. Browse them and choose a lender who is offering the loan at the most competitive rate of interest. This will help you reduce your EMI payments to a great extent.
• Opt for a Long Loan Tenure: This is one of the most effective tips to lower your EMIs. Note that home loan EMIs are directly proportional to the tenure. The higher the tenure, the lower is the EMI. There are many home loan EMI calculators available online that will help you calculate the EMI you need to pay on your loan. You can use any of these calculators to compute the loan EMI. However, note that a long tenure pushes up the interest outgo. In other words, you end up paying more interest on your loan if you opt for a long loan tenure.
• Keep the Down Payment Amount Big: Note that lenders do not finance 100% of the property’s value. While it varies across lenders, most release funds worth 70-80% of the property’s market value. You need to pay the rest from your pocket as a down payment. Keep the down payment amount big to reduce the loan-to-value ratio. This ratio is an indication of the proportion of the property’s value which a lender can finance via a loan. Not only it reduces your EMI payments but also expedites the loan approval process.

For Existing Borrowers

• Opt for Housing Loan Refinance: If you are an existing borrower and are in the initial days of serving your home loan, you can opt for a home loan balance transfer to reduce your EMIs. The process involves switching to a lender offering better rates. However, note that the move pays only if you are in the early stages of paying your home loan. It is better not to exercise this option if you are in the last 2 to 3 years of serving your home loan. This is because, by that time, you would have paid the major portion of your loan, and switching to a new lender would entail fresh processing charges and other fees, among others.
• Home Loan Negotiation with Your Existing Lender: If you have maintained a healthy relationship with your lender, you can negotiate on the loan’s terms and conditions to bring down EMIs. To foster a good relationship with your lender, make sure to pay EMIs on time without default.
• Pre-pay Your Loan: Pre-paying your loan is another prudent way to reduce home loan interest. Pre-paying brings down the outstanding principal amount, which subsequently reduces the monthly EMIs. If you have received bonuses or maturity proceeds from your insurance policy or any other investments, it is prudent to use a portion of it to pre-pay your home loan.

Summing it Up: With adequate planning, you can not only reduce your EMIs but also ensure that you pay them on time without fail. It will keep your credit score healthy and make you eligible for procuring other loans in the future at better terms and conditions.

Poonawalla Housing Finance offers home loans with affordable EMIs at a competitive rate of interest. Fill up this application form, and our representatives will get back to you