Living in a quiet, peaceful home is the “ultimate dream” for many. But the hiked prices of individual houses and villas might keep them away from owing one. Many people solely depend on housing loans for buying their own place of stay. But the cost incurring during the loan repayment might scare the hell out of many.
The interest rates can be minimized or repaying the loan can be made easy by following a few techniques. Obviously, the many methods of combination and permutation can help in minimizing the rate of interest. But still the user’s individual analysis will be required in such cases. One idea is to come up with the best possible solution or option of loan repayment, so that the client will only have the lowest impact of interest rates.
Some might choose to foreclose an existing loan repayment and decide to get another loan from the same bank or a different bank. But this technique works only in the case of falling interest rates. But the clients often fail to notice the cost associated with this scenario, because this will lead to an increased liability later on.
Repaying the home loans can be intimidating, especially when there’s a financial dearth. But there are numerous ways to lessen the burden of repaying a home loan.
Another option is to increase the rate of the EMIs, which will eventually reduce the tenor, principal outgo, and even the interest charged by the bank. This option would work only when the user has enough financial support to pay off in huge monthly installments.
Most people often go for longer loan tenures, so as to ensure affordable rates of EMI. But in the quest to reduce the amount that’s being paid off monthly, users end up paying more in the form of rate of interest. Here are a few tips that can help people make their loan repayments in the most cost effective way.
It’s better to choose shorter loan tenure because with shorter loan tenures, the complete loan repayment is done faster and that involves reduced rate of interest. Higher interest payouts don’t mean that the overall interest rates will be higher. Only with increased loan tenure, a person has to pay an increased absolute interest payout. Smaller loan tenure means lower absolute interest payout.
Trying and decreasing the rate of interest that a person is entitled to pay while loan repayment can help save the cost on EMI. Before applying for a loan, it’s better to choose one that has lower rate of interest. If the loan has already been availed, still users have the option to go ahead and refinance the rate of interest to a much lower value.
Another method to cut down on the monthly installment is by making a quick repayment of the principal amount. If a person is planning to repay the loan amount in faster installments, then they can avail a loan for lesser down payment. This is because the rate of interest will obviously be very low in the case of lower principal payments.
If a person has enough financial supply on their side, they can decide to payout some extra amount along with their regular monthly installment. This will eventually reduce the tenure of EMI and also the rate of interest. Increasing the EMI by 3 – 5% once in 3 months or a year will also help reduce the interest payout.
Having a lookout for lower interest rates is the best method to strike a good loan amount. It’s better to take up only easy to repay and trusted home loans, so that the interest rates are highly minimal.