The home loan rates are declining day by day as the Repo rate of RBI is regularly declining. Also, sometimes the banks come up with a special offer wherein the banks charge lower interest rates to the customers. Also, the affordable interest rates make it an attractive proposition for the borrower to avail of loans from the bank for housing. The banks currently charge interest rates starting from 6.50% per annum onwards. As the interest rates are calculated on the compounded annual basis, it is necessary that the interest rates decline as the repayment value on the compounded annual basis is very high. The payment of the installment should be made on time to prevent the bank from charging a penalty to the borrower. Also, the credit score of an individual improves when the borrower pays the installments on time. The home loans can be taken for tenure of a maximum of 30 years; however, the actual tenure of the loans depends upon the age of the borrower. The borrower should check for the prevailing interest rates before the approval of the loans on the internet. The interest rates are displayed on the website of the finance portal, wherein the borrower can check for the interest rates being charged.
If the interest rates are high, then, in that case, the borrower can even transfer the loans to another lender. Also, the joint loans taken on the spouse name wherein one of the lenders is women the bank can give a rebate of 0.50%. The bank loans tenure can also be modified according to the requirement subject to the bank approval. The higher the tenure, the higher the repayment value on the same interest rates, while the lower the tenure is interest repayment for the loans. Thus availing of lower tenure is beneficial to avail loans with lower repayment value. The bank interest rates fluctuate and reduce continuously as per the current trend, thus on the flexible interest rates rather than the fixed ones. Also, maintaining a good CIBIL score is necessary for availing the loans at lower interest rates. Banks are keen on extending the loans to the borrowers who are amongst the honest credit payers. Also, the borrower can gain the tax benefit under section 80C & section 24 for the home loans for the principal amount and the interest amount.
Following are the Ways in Which the Interest Rates Can be Reduced:
Transfer Your Loans From one Lender to Another:
The loans can be transferred from one lender to another, and the loans should be transferred to another lender who charges lower interest rates to the borrower. The transfer of loans from one lender to another can help the borrower save money on interest repayment. For the transfer of loans, the previous installments of the borrower should be paid on time, and the credit score should be good.
Move From Fixed to Floating Interest Rates:
The loans interest payment can be changed from fixed to floating interest rates. In the case of floating interest rates, the interest rates can get lowered, and thus the borrower can save money on the interest repayment. Also, the interest rates charged previously on fixed interest rates is always higher; thus, the availing of floating interest rates is more beneficial.
Make Partial Payment and Get the EMI Adjusted:
The installments can be paid off a higher amount to reduce the loans’ tenure and become early debt-free. Also, the bank may provide some rebates to the borrowers in case of the loans’ early repayment, which can help reduce the repayment value of the loan’s interest repayment.
Go for Home Loan Extension:
If the borrower is finding any difficulty in the repayment of the higher EMI’s, then, in that case, the borrower can ask for the home loan extension of the loans. Due to the extension of the tenure, the loans repayment value may increase. But the benefit is that the loan’s monthly EMI may get reduced, which can lower the burden of the borrower for the repayment of the loans.
The above strategies can be beneficial for the borrowers to either reduce the repayment value or the monthly EMI’s on loans. The loan EMI is calculated on a compounded annual basis; the repayment value is already high though the loan’s interest rates are low. So the borrower should try their level best to reduce the maximum interest repayment. Lowering the interest rates can help save a lot of money for the borrower.