When it comes to purchasing a home, one of the most difficult decisions to make is where to get a home loan. If you have taken out a home loan, you may be concerned about the amount of interest that will be paid.
In this article, we’ll show you how to lower your house loan EMI so you may get out of the loan trap as quickly as possible. At the same time, there is only one simple option to pay off a home loan early, which is to prepay it. The majority of people do not have a lump sum amount to pay in advance.
What would you do if you were in this situation?
Do you have to pay back your house loan over a period of 20 to 25 years?
Tips to Reduce your Interest Burden While Repaying Home Loan
So it’s not like that at all; you may pay off your home loan rapidly by making tiny pre-payments on a regular basis.
Reduced EMI by Paying 10% Extra Every Month
Two examples can be used to understand Pre-Payment in a simple manner. In the first scenario, assume you have a home loan of Rs 25 lakh with a 20-year repayment period (240 months). Assuming that the bank’s house loan interest rate is 9%, your EMI will be Rs 22,493 in this case. Will arrive Let’s say you increase your monthly EMI payment by 10%.
As a result, instead of paying Rs 22,493, Rs 22,493 pays Rs 2,249, bringing the total to Rs 24,742. As a result, your loan will be paid off in 190 months, or 15 years and 10 months, and 50 percent of your total EMI will be lowered. By paying 19 EMIs extra, you were able to save 50 EMIs.
On the other hand, if you understand the second scenario, you can cut your loan even further by paying 20% more. By paying 20% more, your home loan will be completed in 159 months rather than 240 months. Your 81 EMI will be saved this way. By paying 32 EMIs extra, you will save 81 EMIs.
What you should do for Down Payment?
Explain that banks will lend up to 75% to 90% of the house’s purchasing price. The balance is referred to as a down payment. If you buy a house for Rs 40 lakh and the bank grants you a home loan for Rs 35 lakh, you would be responsible for the remaining Rs 5 lakh.
Many Experts advise that for a down payment, one can borrow for a period of time from family or a friend. A loan against the Provident Fund, on the other hand, is possible (PF). If none of the other options work, a loan from your company might be used as a down payment.