3 Ways New Home Loan Borrowers Can Reduce EMI Amount


Taking a home loan is an important decision. If you do not do enough homework to zero on the best possible deal it costs you dear since a mortgage is running for a long-term loan often 15-20 years.

For example, an important factor that will help you decide which lender to contact is the interest rate being charged on the loan. Not getting the lowest possible rate can prove costly. Sample this: Just a 0.5% difference in interest rate (7.5% instead of 7%) There could be a high EMI of Rs 3.64 lakh for home loans with a period of 20 years for a loan of Rs 50 lakh.

That is why it is important to ensure that you tick all the correct boxes at the beginning. Here’s how a new home loan borrower can reduce his EMI amount.

1. Find the lowest interest rate

An online search can easily give you the interest rate charged by various banks and housing finance companies. However, you need to understand that not all borrowers are offered the lowest rate as it often comes with different terms and conditions. So, you need to shortlist at least 5-7 lenders and then start checking their terms and conditions for the lowest interest rate. The low-interest-rate will help you reduce your EMI if you get a suitable lender.

2. Choose the right property

While you have shortlisted a lender who is giving you the lowest interest rate to suit your profile, the lender cannot approve the loan due to the property. Many lenders have negative lists for properties and localities of the types in which they do not extend loans. So, you need to check that the lender who has the plan to reach will finance the property you want to buy. If the property is on the negative list, you may have to either go to the next best lender or fix your property selection in such a way that it meets the lowest rate lender’s terms.

3. Arrange high downpayments

Most lenders offer the lowest interest rate to borrowers who keep the loan to value (LTV) ratio lower by making a higher downpayment. So, if you can make a downpayment above 20-25%, you can get the lowest rate offered by the lender. So higher downpayments not only reduce your EMI by keeping the outstanding amount low, but they can also give you a lower interest rate on the loan.

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