SELECT SHORTER TENURE PERIOD
As we all know that to buy our dream house, we would have to apply for a home loan. We should always select a shorter tenure for repayment of the loan. As it reduces the interest amount while repaying. For example, if you take a loan of 40 lakhs, and the interest rate is 8% and the tenure is 20 years, then the monthly EMI would be INR 33,458. If we calculate the amount of interest for 20 years, the total would be INR 80,29,825. That is double the amount that you will be paying. So always select a tenure that is less so that you can save a lot. You can always opt for a short tenure so that it can save your hard-earned money.
PREPAYMENTS CAN BE CONSIDERED
If you want to reduce the interest on the loan, the easiest way is to prepay a certain amount once a year. That way the amount will be reduced on interest and the tenure will also get decreased. Making frequent prepayments will substantially bring down the principal amount, thereby reducing the total interest. For example, if the loan's tenure is 20 years and you repay a certain amount of money, for example, at a 6% interest. However, first, you will have to clarify the details with your bank before doing this. Then you can pay the amount according to your comfort. It will reduce the amount as well as the tenure.
INVEST IN SIP OR MUTUAL FUNDS
You can always invest the remaining amount in sip's or mutual funds as they give a good return in a period of time. Only, invest in the market when you are 100% sure about it and always consult some professionals before investing. This is a good option to save the interest of the loan as it will give a good return. This will save an ample amount of interest. For example, if you have to pay the interest amount in 20 years and the interest stands more than 20 lakhs. You can invest some amount in the sip and you will get a good return by which you can save the interest amount.
COMPARE INTEREST RATES ONLINE
There is always a scope of improvement and you can always do proper research before applying for the loan. As you will invest your money in your dream house and pay the amount while working hard. So it is always better to compare the interest rates online while taking any decision. As there are many banks and they offer different rates and give specific privileges. So, it is always best that we confirm and cross-check.
PAY MORE AT THE TIME OF DOWN PAYMENT
Some banks offer loans of 80% to 90% and you will have to pay the remaining at the time of down payment. However, it is recommended that at the time of the payment you should pay more from your pocket as this will automatically reduce the amount of the loan and you will have to pay less interest. We often assume that when we buy our house it becomes our however that is not the case the part which you have paid like 20% you have paid from the whole amount. The house is still the bank's property. In case if you don't succeed to pay the amount then the bank will seize it. So it is always good that you pay the amount as soon as possible.
HOME LOAN TRANSFER CAN BE AN ALTERNATIVE
When you feel that the interest charged by your bank is higher than other banks and you want the loan amount to be transferred to a different bank. You can opt for that option so that your remaining amount of the loan can be paid at a lower interest rate. You can transfer the remaining principal amount to another bank or lender at a lower interest rate. Always remember, that the remaining payment if it is not paid on time it can cost you a higher penalty. So before taking this as an alternative always pay the unsettled amount. This option is the least favorable and you can only select it as the last option for the interest reduction on the amount.
INCREASE YOUR EMI
There are some banks and lenders who allow you to revise the amount annually. If you get a good job in the future and your income has raised from the previous year, you can always revise the amount so that you can repay the unsettled amount on the same interest but at a revised rate. The tenure will get automatically reduced and you will have to pay less interest.
Always keep handy these tips whenever you will think of buying a new house. It will help in buying your house a little easy. Always use an EMI calculator you can always find one on any site and you can easily calculate your interest.