When you consider buying a dream home, the best possible way to make it more comfortable and easy is taking a home loan. One of the major factors concerning about the home loan is its interest rate. Since it’s a huge investment, the repayment of home loan should not be a burden for the borrowers.
Here are some smart tips to reduce the interest rate on your home loans.
1. Short Term Home Loan Tenure
Shorter duration of the home loan will definitely increase the amount of EMI and that guarantees a faster repayment of your loan. This means the principal amount of your home loan is paid much faster that will result in the reduction of the absolute interest rate.
2. Pay more EMIs
One of the effective ways to reduce your rate of interest is to pay additional EMIs. The extra EMIs you are paying will not only reduce the principal amount, but also the interest rate.
3. Refinance the home loan
To get the benefit of a lower rate of interest is transferring your existing home loan to another lender, which is otherwise called refinancing. You need to watch out for the best interest rate offers prevailing in the market. You can switch your home loan to another bank/ financial institution who offer a lower interest rate than your current lender. While evaluating the benefits, keep your eyes on the additional charges like processing fee, legal fees etc.
4. Make part-payment of home loan
Another effective measure to reduce the home loan interest rate makes a part prepayment. The surplus cash you paid will reduce the principal outstanding on your home loan which will definitely bring down the interest rates.