NEW DELHI: Home loan is one of the biggest financial commitments that one makes in life. However, it is not very easy to pay off a home loan. Since the home loan amount is usually high therefore its interest amount is a big add on. But still, it is possible to save money.
Given below are the simple tips that can help you save money on the home loan repayment: Prepay the amount of the loan
: Prepaying the loan amount can lower down the interest to be paid. For loan prepayment, one needs to be financially disciplined and committed. Furthermore, the applicant need not pay pre-closure charges if the interest rate on home loan is adjustable (floating). But in case of fixed rate, a penalty or fee needs to be paid. Ask for a lower interest rate
: The loan applicant can save money on a lower interest rate. One needs to negotiate on the rate of interest with the bank. Being an old and loyal customer, the bank would definitely regard and provide a lower interest rate. Do the research in advance
: Before applying for a home loan, one needs to do a lot of research. There might be a possibility that two banks have the same rate of interest but the application fee and other charges may vary. Therefore, thorough research is a must as it would help in saving a lot of money. The loan applicant can also compare the home loans through online marketplaces and choose the best which suits his/her requirements. Make investments
: Start making investments in different schemes so that a good amount can be collected to make the down payment for the home loan. If the down payment is paid in a huge amount then the loan amount would be less and this would further help in getting a lower interest rate. Transfer the home loan balance
: In the process of the home loan balance transfer, one bank takes over the home loan from an existing bank. Usually, the bank that takes over the home loan, offers a lower rate of interest to the loan applicant. This further helps you with lower interest amount and lesser loan tenure. Obtaining home loan balance transfer is easy and effective for the purpose of saving interest.
Always keep in kind that prepaying your home loan to the maximum, making investments and channelizing the income in a better way can be of great help in terms of saving. So, follow the tips given above and go high on savings. Here are some of the most common questions asked about home loan prepayment:
- What is the benefit of home loan prepayment?
Home loan prepayment leads in financial benefits and help in reducing the interest rate.
- Can I pay more than EMI for a home loan?
Yes, you can pay more than EMI for your home loan. The surplus amount will reduce your principal outstanding and interest burden.
- Is home loan prepayment a tax benefit?
Home loan prepayment in addition to your EMI will also cover under section 80C for your income tax deductions as this amount is a repayment of your principal amount.
- What are home loan prepayment charges?
You will have to pay a prepayment penalty to the bank if the interest rate on home loan is fixed.