From deciding to move into a new house to the last EMI and then to accommodate the new house with all the accessories is never ever easy. But you can make it less difficult by availing a home loan at lower interest rates starting at 11.99% p.a.
Now, this is possible if you have a good credit history. Buddy Loan one of the leading loan aggregators disburses home loans and home improvement loans with better repayment options and a trail to enhance your credit history.
The harsh reality!
What does it exactly mean buying a home? For many, it is bottleneck wherein all the finances discretionary spending (eating out, clothes, travel) will pipeline for your home.
The home buying process begins with deciding and reasoning out the need to want in order to buy a house. Let’s address the factors to consider when you decide to move into a new house.
- Preparing for the home buying challenge when financing a house.
- Determining how much to pledge for a house to avail a home loan.
- Confusion between pre-qualification and pre-approval.
- Picking the right community for your lifestyle.
The odds are many, but making the journey easier without hampering your repository finances for retirement, child’s future, emergency funds is possible.
Reduce the burden with a home loan
Longer loan tenure
Though the repayment capacity is
Opting for a longer home loan tenure will reduce your EMI amount and thus enhance your credit history if there are no defaults. Which means it increases your loan eligibility.
Though longer tenure makes way for the higher interest rate of the loan there are ways to sort this out. Prepayment is the best option during such times. Therefore, you can repay as and when you incur surplus money.
Remember that the RBI has barred lenders from charging prepayment fee in case of floating rate loans. Whereas, they are free to levy or waive off this charge in case of fixed-rate loans. Make use of online EMI calculators to find out the optimum loan tenure based on your repayment capacity.
Opt for a bigger down payment
Since RBI has allowed the lenders to finance up to 75-90 % of the total property cost in the form of home loan. The borrowers will have to work on rearranging the remaining amount out of their own pocket as a down payment.
While most borrowers try to opt for a minimum down payment contribution, opting for a higher down payment is best for the loan applicant. A higher down payment results in the lower loan amount, which in turn leads to lower interest cost and EMIs.Ma
king a higher down payment also increases the chances of loan approval as it reduces the risk for the lender. However, while making a higher down payment, do not sacrifice your emergency fund or savings of your crucial financial goals.
Doing so can lead you to borrow loans for those goals at a higher interest cost.
Research and compare loan offers
Always compare amongst available loan options on the basis of interest rate, processing fee, etc, before finalising the lender. The interest rate and other associated costs would vary across different lenders depending on their take of credit risk associated with your profile.
For example, many lenders offer home loans at lower rates and charges to those with higher credit scores. Many also price their loan rates on the basis of their job or employer profile.
With scores of banks and Buddy Loan disbursing home loans, the best way to compare interest rates and features is to visit online financial marketplaces. These platforms facilitate comparison of the home loans & home improvement loans. They are offered by lenders on the basis of your credit score, monthly income, job profile and other eligibility criteria.
Here are the tips you may follow to get rid of your home loan EMI faster
Make regular part payments
Partial payment on time reduces your overall burden & clear your home loan faster. Annual bonuses, maturity deposits from insurance policies can help in your part payment faster.
For example, for a Rs 30 lakh home loan of 20-year tenure at 9% interest, your EMI will be around Rs 27,000. Along with paying the EMI, if you pay an additional Rs 21,000 every year, your, home loan will be paid off in 18 years instead of 20 years. You will save around Rs 4.1 lakh in this case by way of savings on interest cost.
Use your home loan to refinance other loans
Use the top-up on your home loan if you have other costly loans like personal loans, credit card loans, to pay. You could then use the EMI earmarked for the personal loan to repay the home loan faster.
For instance, you have a Rs 30 lakh home loan for 20 years as mentioned above and along with that, you have another personal loan of Rs 4 lakh at 12% interest rate for which you are paying around Rs 8,900 EMI.
Suppose you have another 3 years of repayment left for the personal loan (principal outstanding of around Rs 3 lakh). In this case, you can take a top-up of Rs 3 lakh on your home loan and repay the personal loan and use the personal loan EMI of Rs 8,900 to repay the home loan.
Refinancing home loan
If your current lender is not offering you the best rate on home loans, and you think that the total interest burden can be reduced by switching your loan to another lender, then it is worth doing that.
Experts say if any other lender is offering you 50 basis points lower interest rate than your current home loan then it is worth switching your loan.
Pay more than your EMI
If you can manage to pay an additional amount over your actual home loan EMI amount every month, it will help you in the long run and can drastically reduce your loan burden.
In the above home loan example, if you pay an additional Rs 2,500 every month, then your home loan can be repaid in 16 years, four years before the original tenure.