Covid Crisis: Four Ways To Reduce Your Home Loan EMI Payments


Refinancing your home loan at a lower interest rate is one of the easiest ways to lower EMIs

With the lockdown caused by Covid-19 affecting cash flows, paying regular loans has become a challenge for many people. For those who have taken out home loans with high EMIs, this challenge becomes more difficult. As a borrower, if you are looking for ways to simplify your home loan by reducing your EMI payments, then follow these tips.

Change your lender
When you took out your loan, you may have chosen a lender who offers a high home loan interest rate. Now, when you’ve found a new lender willing to offer significantly lower interest rates, consider switching your lender mid-loan. Even if you can’t find a lender with a lower home loan interest rate, you should find a lender willing to extend your repayment period. Before switching lenders, use an online home loan EMI calculator to know exactly how much your EMIs can go down.

Switching lender is extremely convenient and all you have to do is contact your existing and new lenders and request a loan balance transfer. Refinancing your home loan at a lower interest rate is one of the easiest ways to lower EMIs.

Prepayments help
In the past, loan prepayments were associated with high fees. Recently, however, most banks and NBFCs have stopped charging prepayment fees, allowing borrowers to repay large sums of their home loans before the end of their term. If you want to lower your EMIs and the amount of interest billed, prepay your home loan online or offline at the start of your term.

Make a larger deposit
A higher deposit reduces the main loan amount, which means that the interest payable and the calculated EMI are automatically reduced. If you have additional savings to use to make a substantial down payment while applying for a home loan, don’t hesitate to do so.

Choose longer terms
If no other option works for you, extend the term of your home loan. With a longer term of the loan, you will have to pay more interest, but your EMIs will go down significantly. Negotiate with your lender to extend your repayment time. Before making this decision, determine the exact amount of interest you will pay by using a home loan EMI calculator.

Before choosing a lender, read the home loan eligibility criteria imposed by your financial institution for term extension, refinancing, or prepayment. Make use of clever financial planning and, if possible, take advantage of opportunities for interest or EMI reductions. However, be wary of EMI reduction methods that require higher home loan interest payments. With appropriate planning, you can easily apply for a home loan with reduced EMC exposure for the home loan and keep your savings safe for emergencies.

Source: Tax Guru

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