If you are planning to buy home in budget then here are some tips to save on home loan interest. Let’s check how you can save on interest of home loan? If you want to invest in flats then first opt for a 2 BHK flat in Jaipur in budget.
What is a Home Loan?
Home loans are a type of financial assistance available from lenders such as banks or housing finance companies (HFC) to buy homes from sellers, or build houses independently.
Because this loan is usually a higher number than a typical car or personal loan, this is given by lenders after a careful assessment of the Petitioner’s payment capacity and, analyzing the details of the property purchased. This loan must be repaid for several years through monthly payments called monthly installments (EMI).
Interest on Home Loan
- As the home loan repayment is usually spread over 10-30 years depending on the loan amount and repayment capacity or salary of the home buyer, the interest paid on this loan is much higher than any retail loan in India.
- Although the interest rate is the lowest for home loans, the total interest paid as long as loan ownership is very high. This interest rate varies from banks to banks.
- For a special 20-year home loan at 8% interest rate, total flower debt is equal to the principal amount. Thus, the buyer ends by paying twice the amount of the loan available.
- In some cases where the term of office is higher than 20 years, or a higher interest rate, the total interest amount exceeds the principal amount.
Saving Interest on Home Loan
Because home loan payments have a higher interest component, here are some ways in which someone can reduce debt interest on home loans:
- Switching to MCLR-based home loans: MCLR stands for marginal costs of fund-based loan interest rates. Under the MCLR option, interest rates are based on the repo level and bank fees maintain funds. As the Reserve Bank of India (RBI) revised the repo level according to macroeconomic conditions over time, the resulting MCLR was also revised in line with the repo level. Transferring existing home loans to MCLR-based interest rates generate lower interest rates than home loans based on the main bank loan (PLR), or fixed interest rates.
However, it should be noted that only banks can offer MCLR-based home loans. HFCS does not offer a home loan based on MCLR because they are not under the scope of the RBI. In India, HFC is regulated by the National Housing Bank (NHB) and provides home loans based on their internal benchmark level.
- Pre-payment house loans: Pre-paying houses refers to paying home loans before genuine ownership. This pre-payment can be partial or full. Because pre-payment is made on the principal amount, the interest applies to that number for the remaining loans saved.
However, it was financially feasible to pay pre-paid home loans during the early years of loans (about 5 years the first 20 years of loans; and around 7-8 years for 25 years loans) as a flower component) higher during the initial shipping period.
You May Read Here For More Information Pre-Payment of a Home Loan.
- Increase EMI: The increase in EMI amounts to generate payment earlier from home loans from the time of the original department. This in turn reduces the total flower of debt over time home loans.
For example, consider Shah to take Rs. Home loan 30 lakhs on 8% interest rate for 20 years of time. EMI amounted to Rs. 25.100. Total flower debt during the period of 20 years is Rs. 30.2 lakhs.
Now, after paying regular EMI’s for 2 years, Ms. Vijeta asked the bank to increase EMI with around Rs. 3,000 according to the increase in income; for this reason, the bank agrees.
By paying higher EMI, the remaining term of the 18-year decreases to around 14.5 years (14 years and 6 months), and also saved around Rs.5.65 Lac of total interest.
It is strongly recommended to increase the number of EMI every year and when there is an increase in documented income, based on the financial feasibility of the applicant.
However, it is bank wisdom to allow changes to the number of EMIs or the total amount paid by EMIS according to the Petitioner’s payment capacity.
You can read here for more information about the effects of the number of housing loans, the number of EMI and tenure on debt.
- Home loan transfers: This is a setting where housing loans from existing lenders are taken over by other banks. Usually done when lenders take over loans have a lower interest rate than existing lenders. So in this case, the buyer pays an extraordinary number of house loans with existing lenders and takes a home loan with other lenders whose interest rates are lower than the existing lenders.
However, the cost of processing new lenders, and takeover of costs by existing banks, such as and if applicable must also be considered. I hope these ideas of saving interest on home loan will help you out. If you have a plan to buy flat in budget, have a look on these 2 or 3 BHK flats in Jaipur near Akshay Patra temple.