Home is not just a place. It is an emotion. Buying a home is a landmark achievement for most people. The exponentially rising real-estate prices have made buying a house challenging for ordinary people. Taking a home loan can be of immense help. It can save you a lot of trouble. Home loan repayment can be overwhelming, especially with the ever-increasing cost of living. If you’re struggling to manage your home loan repayments, several ways exist to save money and reduce the financial burden.
Let’s explore five simple tips to save money on your home loan repayment and make the best of it.
Tips to save money on home loan repayment
Like other loans, home loans also must be repaid within the given loan tenure. You must choose the EMIs wisely. Factoring in your income, expenses, and other financial obligations will help you make the right choice. There are ways to save money on home loan repayments, meaning you can earn a discount on it.
Let’s take a deep dive into how it can be done.
1. Refinancing
Refinancing is the first and most common way to save money on home loan repayment. It can effectively reduce your monthly repayments and save money in the long run. It simply refers to the process of taking a new loan (at better terms) to repay the existing home loan amount. The new loan typically has a lower interest rate, which means you can save money on your monthly repayments. Before refinancing your home loan, you must compare different lenders and loan products to ensure you get the best deal.
2. Increase your EMIs
Increasing your home loan EMIs can also be a great way to repay your loan faster and save money on interest charges. Even a small increase in your monthly repayment can make a significant difference in the long run. For example, if you have a 30-year home loan of INR 50 lakh at an interest rate of 8%, increasing your monthly repayment from INR 38,224 to INR 40,000 can help you pay off your loan four years earlier and save over INR 9 lakh in interest.
3. Make lump sum repayments
Making lump sum repayments can also help you save money on your home loan repayment. A lump sum repayment is an additional payment you make on top of your regular repayments. You can make lump sum repayments whenever you have extra cash, such as a bonus or tax refund. Making lump sum repayments can help you pay off your loan faster and reduce the amount of interest you pay over the life of the loan.
4. Make the best pick
Home loans are a huge and long-term financial obligation. You must consider several factors before applying for a loan. Choosing the right loan product can also help you save money on your home loan repayment. There are several loan products available, including fixed-rate loans, variable-rate loans, and split loans. Fixed-rate loans offer a stable home loan interest rate, which can be beneficial if you prefer to have a predictable repayment amount. Variable-rate loans, on the other hand, offer a lower interest rate, which can be beneficial if you’re comfortable with the risk of interest rate fluctuations. Split loans are a combination of fixed and variable-rate loans, which can offer the best of both worlds.
5. Negotiate the best deal
Finding the right loan product and the best lender is not sufficient. You must focus on negotiating with your lender to save money on your home loan repayment. If you’re struggling to manage your repayments, you can talk to your lender and negotiate a better deal. For example, you can ask for a lower interest rate, lower fees, or a repayment holiday. Good credit history can be your best asset while negotiating a bargain.
Final words
Taking a home loan is the best way to purchase a house. On some occasions, managing your home loan repayment can be challenging. There are several strategies you can use to save money and reduce the financial burden. Refinancing your home loan, increasing your repayments, making lump sum repayments, choosing the right loan product, and negotiating with your lender are all effective ways to save money on your home loan repayment. Following these tips can help you save a lot of money on loan repayment.
