Last Updated on April 3, 2023 by Tabraiz
When compared to other major purchases, like a car, sudden medical expense, foreign vacation, or saving for a child’s college education, a home is likely to be the largest financial investment most individuals will make in their lives. Home loan EMIs typically consume a larger percentage of most people’s financial lives and productive working years due to the larger loan amounts and longer loan tenures involved. You can reduce the burden of your home loan EMIs in a number of ways, one of which is to take advantage of the historically low interest rates on home loans. You can use the SBI home loan EMI Calculator to determine your monthly payment.
In addition, current and potential homeowners can use the following measures to lower their EMIs:
When considering taking a housing loan, it’s important to remember these things:
To save money, extend your housing loan’s payment tenure.
Your estimated monthly instalments (EMIs) on a home loan will be lower if you extend the length of time you borrow money for it. This will help you to make your loan payments without putting undue strain on your budget. An annual interest rate of 8.5 percent multiplied by a loan term of ten years yields a monthly principal and interest payment of Rs 61,993 on a loan amount of Rs 50 lakh. However, if you extend the loan’s payback term to 25 years, your payment will be significantly less, at Rs 40,261. The HDFC home loan EMI Calculator can help you make sense of the adjustments to your EMI if you’re having trouble keeping up.
Therefore, it is prudent to use an online EMI calculator tool, such as SBI home loan EMI Calculator or HDFC home loan EMI Calculator, to choose a loan tenure for which you would feel comfortable making monthly payments.
Even while a longer loan period may result in a higher interest expense overall, you can mitigate this effect by making full or partial prepayments whenever you find yourself in a financial position to do so. While prepayment fees are prohibited for floating rate loans by order of the Reserve Bank of India, they are nevertheless possible for fixed-rate loans. It is preferable to avoid paying prepayment fees wherever possible because the benefits of doing prepayment (in the form of savings on interest costs which you can see on the HDFC home loan EMI Calculator) far outweigh the costs.
You should put in a higher amount of downpayment.
Due to the fact that the Reserve Bank of India permits home loan providers to finance 75%-90% of the cost of a home, borrowers needed to put down a minimum of 10%-25% of the purchase price. Even if you do satisfy the minimal requirements, you should use the HDFC home loan EMI Calculator to determine if you can afford to make a greater down payment. You should do this because the smaller your loan amount and the lower your monthly payments of principal and interest will be, the more money you will have to put down as a downpayment.
Your future prospects of getting a house loan approval will improve if you make a greater down payment. When trying to save up for a larger down payment on a home loan, it’s important to avoid jeopardising your financial stability or your capacity to make other important purchases.
Search for the best deal from a variety of potential lenders
The SBI home loan EMI Calculator can be used to estimate monthly mortgage payments based on the loan amount, term, and interest rate entered by the borrower. However, it is also a good idea for prospective borrowers to compare the terms and conditions of loans from multiple lenders before deciding on a single provider.
Loans can vary greatly in terms of interest rate, length, processing fee, loan amount, and prepayment penalties; it’s important to weigh all of these factors together when deciding which one is best. Visit online financial comparison portals to compare lenders and choose the best one for your needs instead of going to each one individually. Platforms like this allow customers to compare possible lenders offering home loans based on their specific financial needs and qualifying criteria, like credit score and monthly income.
Keeping a high credit score is necessary to qualify for low interest rates
Your credit score is a major consideration when evaluating your application for a house loan. It’s possible to qualify for lower interest rates and more generous repayment terms when you have a strong credit score (defined as 750 or higher). Checking one’s credit score is a common sense first step in ensuring one is not left disappointed when applying for mortgages. People with poor or no credit scores can take the appropriate steps to build or repair their credit, reapply with a better and higher score, and then be approved.
The second stage is to make checking one’s credit report a regular habit; doing so at least once a month is recommended. If you follow this procedure, you’ll have more time to fix any mistakes on your credit report and get the bureau to fix any discrepancies as quickly as possible, which will increase your credit score.
Make a choice to refinance your home loan and extend the length of your loan.
Because a longer loan term results in a lower EMIs, it is a popular choice among borrowers who wish to reduce their EMI burden but do not wish to change their current repayment terms. As you play about with the SBI home loan EMI Calculator’s inputs, you’ll see the monthly payment change as you alter the loan’s term.
Conversely, ask your lender for an extension of your loan’s repayment period is considered loan restructuring, which may be subject to a rewriting rule and thus have a negative impact on your credit score. Avoid this by refinancing your current mortgage into a longer term loan at a lower interest rate.