6 Ways to Save Money on Home Loans
Published: Jan 30, 2023
Buying a home of their own is one of the most important milestones in almost everyone’s life. However, this is also one of the biggest financial decisions, given the constantly increasing property rates. Some people manage their finances in such a way that they have sufficient funds before they make the purchase. On the other hand, some others take a step towards buying their dream home much earlier in life. In such a scenario, availing a home loan is the most viable option one has. There are a number of financial entities (banks and NBFCs) that are offering quick home loans in India.
Now let’s talk about another important aspect of this popular financing option, which is the repayment of the loan. Generally, home loan amounts are on the higher side, and repayment can put some extra stress on your pocket. However, this does not mean that availing home loans is not a good option. Here are 6 important tips that one can follow to save a significant amount of money on a home loan:
1.Invest Before Applying for a Home Loan
Managing your finances thoughtfully and making some good investment decisions can really go a long way. In today’s time, there are a number of investment schemes that can help you accumulate some funds. You can use this money to make the down payment on your home loan. The larger your down payment amount is, the lesser your loan amount is going to be. This also means that the interest payable on the home loan will automatically decrease.
2.Do Some Research Beforehand
Doing thorough research on several schemes is important, regardless of the type or amount of your loan. There are several financial entities that claim to be the best home loan company in India. In such a situation, it is important to get a clear idea about the various loan schemes they are offering. It is possible for two lending institutions to have similar rates of interest, but the additional fees and charges may vary. And all these small things can actually make a huge difference when it comes to the total payable loan amount. With some research, this can be avoided, and you can find home loans at low interest rates.
3.Negotiate with the Lender
Yes, you read it right! You can actually negotiate the rate of interest with the financial institution you are availing a home loan from. This is one of the easiest ways to save some real money on the interest payable. Ultimately, this also leads to a lower amount that you need to pay.
4.Opt for a Floating Interest Rate
There can be times when financial entities also face a shortage of funds. In such cases, they have the option to borrow some money from the Reserve Bank of India. However, the RBI has a fixed interest rate for such instances, known as the repo rate. The financial institution (bank or NBFC) gets charged interest according to the current repo rate. This rate keeps changing from time to time, and these changes have a direct impact on the interest rates applicable to different types of loans, including home loans. If you opt for a floating interest rate on a home loan, the interest rate and interest outflow for the tenure will decrease whenever the repo rate goes down.
5.Prepay Your Loan
Most banks and NBFCs come with a loan prepayment facility. When you choose to pay some part of the loan in advance, it can also slash your total interest payable. Although this requires a great deal of financial planning and commitment, the long-term effects are absolutely amazing.
6.Transfer the Balance of Your Home Loan
As the name suggests, a home loan balance transfer is a process in which you get your existing loan transferred to a financial institution that is offering a lower interest rate. This can be done at any point during the loan tenure. If you find a better option, this can save you a lot on the interest amount.
Capri Loans, one of the leading NBFCs in India, is offering affordable home loans in a hassle-free manner. We have a wide range of schemes that you can explore and apply for a home loan at the most competitive interest rates.