What arethe Effective Ways to Reduce Home Loan EMI?

However, despite the significant number of individuals availing such credits, most of the borrowers still do not know how to calculate home loan EMIand the procedure to reduce it.

Here are 5 tips on how you can reduce your home loan EMI –

● Opt for a Longer Tenure - Loan tenure can have a significant impact on the total cost of a home loan. Tenure in case of such advances can range up to 20 years. Borrowers should opt for a longer tenure if possible to reduce the number of monthly obligations.

● Avail Home Loan Balance Transfer -Balance transfer of a home loan is a process to transfer an existing loan to another lender, offering a lower home loan interest rate. A few other benefits of home loan balance transfer include better repayment terms, additional loan amount and more.

It is advisable to opt for this facility in the early years of a repayment period. The interesting part of EMI’s is higher during this time. Hence, availing for balance transfer in this period ensures that a borrower can make the most of this facility.

● Opt for Part Pre-Payment - Borrowers can reduce their home loan EMI by making regular part pre-payments towards the principal part of a home loan. As the principal amount decreases, the EMI amount will also reduce subsequently.

To make the most of such a facility, borrowers must ensure that they avail a home loan from such lenders that charges minimal part pre-payment fees.
There are such NBFCs that offers zero charges on part pre-payment. Some of the other benefits that they offer include the high loan amount, lowest home loan interest rate, flexible tenure, and more.

● Choose a Floating Interest Rate - Floating interest rates of a home loan are subjected to change according to the market conditions. The economy is currently in a state of inflation. Hence, RBI is more likely to cut down the repo rate after a point of time, which could subsequently reduce the floating interest rates on a home loan.

Make sure that you know how to calculate home loan EMI so that you can select the type of interest rate that reduces your monthly debt obligations.
Also, as home loans are long term credits, floating interest provides much more affordability to the borrowers. They may be able to enjoy lower interest rates with time.

● Register for the PMAY scheme - The Pradhan Mantri Awas Yojana (PMAY) scheme was initiated by the Central Government to provide affordable homes to citizens across the country. Individuals can avail of interest subsidy on their housing credits under the PMAY. The subsidized interest rate significantly reduces the EMI paid towards such loans.

First-time home buyers belonging to the EWS or LIG, MIG I and MIG II sections of the society are eligible to enjoy the benefits of the Pradhan Mantri Awas Yojana.
Individuals belonging to the Economically Weaker Section (EWS) or Low Income Group (LIG) can avail an interest subsidy of 6.5% for a loan amount of up to Rs. 6 Lakh.

Similarly, the sections Middle Income Group I (MIG I) and Middle-Income Group II (MIG II) can claim interest subsidy of 4% and 3% for a loan amount of up to Rs. 9 Lakh and Rs. 12 Lakh, respectively. 

You should be able to reduce your home loan EMI with the help of the tips mentioned above. Also, make sure that you meet the required eligibility criteria and provide the documents required for home loans correctly to avail such credits with competitive interest rates.