First-time home buyer? Here’s How To Lower Your Home Loan EMI
First-time home buyer? Here’s how to reduce your EMI home loan
New Delhi: A detached house is the dream of most Indians. However, buying a home is a huge financial commitment. Many people in India are not able to buy a house without the help of a home loan. For a first-time buyer, the most difficult and confusing part of the home buying process is finance.
When making the decision to borrow a home loan, people often wonder what the best lending institution is, what type of loan is the best and what are the terms, and what size of home loan they can comfortably repay in the country. over the years. .
The monthly payments assimilated to the mortgage loan (IME) are one of the most important financial commitments and the main determinants of an IME mortgage loan are the interest rate and the tenure you choose to repay the loan amount. . Few first-time buyers know that they can reduce their mortgage burden to some extent by following a few simple steps:
How to reduce the home loan EMI:
1. Lower loan-to-value ratio (LTV): The LTV ratio of a mortgage is the proportion of the value of the property financed by a mortgage. The remainder of the value of the property must be arranged by the mortgage borrower from his own resources. Opting for a lower LTV ratio will reduce the mortgage amount, which in turn will lead to lower EMI and interest charges. So instead of paying the minimum down payment, it is always better to make a higher contribution (down payment) towards the purchase of a home.
In addition, according to experts, as a lower LTV ratio reduces credit risk for lenders, they sometimes charge lower interest rates to mortgage borrowers opting for lower LTV ratios. These lower interest rates further help to reduce the interest rate and the EMI burden on mortgage borrowers.
2. Longer duration: The mortgage is a long-term financial commitment and the longer the tenure, the less the burden of the EMI. New home loan borrowers can reduce their EMI burden by opting for a longer term. Remember that while a longer term results in a lower EMI and higher interest cost, a shorter term results in a larger EMI but at a lower interest cost. Going for a longer home loan would increase the chances of getting approval for the home loan application due to the higher accessibility of the EMI for the home loan borrower.
3. Compare interest rates online: Before settling with a lender, you should compare and check home loan offers online. There are several websites that can help you get the right loan at the lowest interest rates. These online portals usually give a summary view of the interest rates, fees, and other charges of different lenders. Therefore, you need to do proper research to make sure you get the right deal. Look at the base rate, the margin offered, what is the maximum tenure offered, and how the eligibility is calculated and especially if a property similar to yours was financed earlier by this lender.
4. Negotiate the interest rate: Lenders mainly set the interest rate within a minimum and maximum range, the actual rate charged depends on your eligibility criteria. As a borrower, you have the opportunity to negotiate a better interest rate. Financial advisers say you can do this not only by comparing your loan options, but also improving your eligibility by adding a co-borrower and combining the co-borrower’s income with your own.
5. Co-borrow with a spouse: The lowest interest rates are often reserved for borrowers. It is very common for homebuyers to co-borrow with their wives for the lowest rate.
Even after taking out the loan, you should keep an eye on the interest rates to make sure that you are getting a good deal from your lender. If not, consider talking to your lender or even transferring to another lender to give you a better deal.