Be it your first home or a second home purchase that you have completed using a home loan; you can save plenty of money if you follow some easy ways.
A Home Loan is a smart way to convert your wish of owning a dream home into reality without touching your savings. Nonetheless, the problem starts when you start paying the EMIs as it’s not always easy to manage the expected overheads.
That's where we bring to your notice five easy ways to join debt-free homeowners and save years of mortgaged life. Raring to know more? Let’s get started!
1. Leverage Your Credit Score
A Credit Score of 700 and more is considered great for availing a Home Loan at a lower rate of interest. Yes, the benefit of a better CIBIL Score is that it not only helps you get a quick home loan approval but even get a better deal on Home Loan interest rates. As a result, you get to save money when you have maintained a strong Credit Score. Thus, get an access to your Credit Score and correct any issues so that you don’t have to bear the brunt of it and pay a higher home loan interest rate.
2. Negotiate with Your Lender
Many of the borrowers are unaware that they can easily use their CIBIL Score as a powerful bargaining tool to bring down the overall cost of the home loan. You can either schedule a meeting with your bank or call the customer service desk of your lender. You could also ask them to waive off the processing charges because you have a strong repayment history and a healthy Credit Score to your advantage.
3. Shop Around
It is a general tendency that borrowers apply for a Home Loan with a bank that they have a savings or salary account with, thinking that they would give them a good deal. Yes, people are of the opinion that because they have a long relationship with their banks, they may reap the rewards. However, it is not true always! Thus, ensure to look around in the market and see who is offering what! It will be good to browse a third-party website that provides all home loan offers. Check all offers, and assess your needs, repayment capacity and then only apply for the best Home Loan.
4. Maximise the Down Payment
Basically, lenders may ask you to pay at least 15-20% of the total loan amount as down payment and remaining in smaller EMIs over the years. No doubt, it’s a good thing to pay interest only on the remaining 80%. However, since a home loan may continue for a longer duration, it may curtail your monthly budget for longer. Hence, if you can afford, opt to maximise the down payment and pay a lower percentage of the remaining loan amount. It will surely help you save money that you would have paid on paying interest charges on heavier EMIs. You can compare feasible down payments and determine the EMI on the loan amount against that down payment by using the Home Loan EMI Calculator. This is an online tool that will give you an idea of your monthly outgo against the amount borrowed for your chosen repayment tenure.
5. Make Prepayments
You must be getting yearly salary appraisals in your company, and it could be a good idea to devote a percentage of the raise that you get to prepay the loan. Why? When you pay some extra money once or twice a month, it will help you lower the principal. As a result, when principal goes down, so will be your EMIs and you will save money.
The Bottom Line
Now that you know the ways that you can easily incorporate to reduce the cost of your home loans, practice in reality to get started with the habit of saving money! Good luck!
