However, without proper planning and negotiation with lenders regarding interest rates, borrowers may have to bear hefty EMIs throughout the loan duration.
To avoid that, borrowers should be aware of the alternative ways to reduce housing loan interest rates, such as:
Make regular prepayments: Since your monthly instalments consist of two primary components: the obtained amount and interest charged, making prepayments automatically reduces the principal amount. Thus, the total interest imposed will decrease as well.
Choose a shorter tenor: Another great way to reduce housing loan interest rate is to opt for a short repayment period. This way, your home loan will be repaid faster at a low interest rate, helping borrowers to get rid of financial obligations.
However, before making a decision, it is advisable to evaluate the monthly instalments using a home loan calculator to manage finances better.
Opt for home loan balance transfer: Generally, it is essential to compare different lenders before availing a home loan to get the lowest rate of interest. In case the interest charged by a lender is higher, especially after starting the prepayment process, refinancing seems like an ideal solution.
Pay a sizable amount as down payment: Lenders usually provide 75-90% of the total property value, and borrowers are supposed to submit the rest as a down payment. By contributing a higher sum, borrowers can reduce their housing loan interest rate as well as the principal amount.
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