A home loan in India is a financial tool that assists millions to buy to become the owner of a dream home early in life. This loan is offered by all financial lenders like SBI Home Loan and comes at a pocket-friendly rate of interest. However, a home loan is the longest repayment tenure loan and thus requires more of your commitment financially. While the rate of interest is affordable, holding it for a long repayment tenure can simply drain most of your money. Thus, it is recommended to prepay your home loan taken from an SBI home loan or any other lender as early as possible with surplus funds whenever you receive them in future. The next option that can simply save your funds on a home loan is by opting for the low-rate home loan. This article is designed to explain how you can lower your EMI burden of a home loan both post and pre availing the loan.
In what ways can you save on your interest rate on a home loan before applying for it?
The rate of interest (ROI) for home loans differs from lender to lender. And to avail of the suitable rate of interest for a home loan, you must ensure that comparative research is required. Well, it can be performed online by approaching the portals of distinct NBFCs and banks. To make this simpler, you also can approach online financial markets where you can avail all the offerings from distinct lenders in a single platform. Note that applying or availing of a home loan is a crucial financial decision, and thus, you must not avail of it without conducting proper research.
Include in a co-applicant to your application
If you are looking to avail and apply for a home loan, including a co-applicant to your home loan application can lower your rate of interest for it. When computed for the whole repayment tenure, this can bring down your overall borrowing cost. Usually, the rate of interest is lowered by about 0.50 percent by including a co-applicant. Also, this enhances your eligibility for a home loan and can assist you in availing of an additional loan amount.
Maintain a good credit score
Your credit score is an pivotal factor, which is given the highest weightage by lenders for setting your home loan interest rate. A good credit score of 750 & above is always preferred by lenders and even avails home loan approval at the lowest rate of interest. However, if you apply for the loan and do not hold an excellent credit score, then there is always a probability that your home loan application may be rejected by the lender. Thus, it is of extreme importance to check your credit score before applying for a home loan. In the case you find that your credit score is below 750, then you must adopt the required measures to ameliorate it. Such measures include timely repayment of your existing EMIs and credit card dues in full, maintaining a good balance between secured & unsecured loans, keeping a credit utilization ratio (CUR) of within 30 percent and timely checking your credit score to ensure all the mentioned data are correct. In case if any data is incorrect, do report such discrepancies or errors instantly to the concerned lender or credit bureau like CIBIL, CRIF Highmark, Experian and Equifax for rectification. Once rectified, your credit score will automatically improve, leading to an enhancement in your home loan eligibility chances for SBI home loan or other lenders.
Negotiate terms with your existing banker
Lenders appreciate disciplined repayment behaviour. Thus, if you have a history of good repayment records and hold a good credit score of 750 and above, you are in a good position to negotiate with your existing banker for a preferential interest rate on the home loan. Note that such relations may be in the form of current, savings, fixed, recurring, loans or credit card accounts.
If unable to avail a preferred rate of interest on a home loan, you can still negotiate on the service conditions with the existing banker, provided you have always maintained a good relationship with the.
How can you simply save on your home loan interest rate after you have applied for it and served its EMI?
Opt for the balance transfer option
A home loan balance transfer, even called a home loan to refinance, is a good medium to lower your interest rate burden on a home loan. However, it can just be taken up on the ongoing home loan. It means if you are serving a home loan currently, then only you can take up the balance transfer option. However, to take up this option, you should possess a good loan repayment history and should have served the loan for over 2 to 5 years. When availing of this facility, your ongoing loan is closed with your current lender, and the outstanding loan amount on the home loan gets transferred to a new lender. The home loan balance transfer option usually is performed to bring your interest rate on a home loan down or to avail favourable or better terms and conditions for the home loan. For availing of a better deal on the home loan balance transfer option, you may approach SBI Home Loan Customer Care service as the State Bank of India is one of those lenders that offers the lowest rate of interest on home loans in India.
Prepay whenever possible
Well, opting for the prepayment or part prepayment option does not lower your interest rate on a home loan, but doing so can save adequate funds that you would have repaid as an interest component on the home loan. Thus, whenever you avail some bonuses, savings, or any incentives on your home loan, use the prepayment option for your home loan. Doing so can lower your principal amount and even can save a lot of funds, which you would have repaid as an interest component.
Basically, whenever you opt for the part prepayment option, you are given 2 choices – one to lower your repayment tenure on a home loan, and the other one is to lower your EMI outgo. Thus, you must select one based upon your needs and proceed ahead.