Are you one of these people? Then fret not, because this article will give you some smart ways to tackle the interest of your home loan and ensure you come out smiling and with a home of your own.
The first thing you’d want to do is reduce your interest rate or decrease the amount of interest you have to pay. There are numerous ways to do this and investing some time in working on a few things could allow you lowered interest rates & help you save on the total interest payable on your home loan.
1. Work On Your Credit Score For Lowered Housing Loan Interest Rates.
If you work on your credit score you have leverage to negotiate a lowered interest rate. The difference will be minimal but even this will make a huge difference over the tenure of the loan. You can work on your credit score by paying off your existing debts on time and not defaulting on any payments. Also, make all you credit card payments on time or before time. Ensure you stay well within the credit limit and try using your oldest credit card. The closer your credit score is to 900, the more negotiating power you have to reduce your interest rate.
2. Save For A Higher Down Payment.
The interest payable per month is calculated on the amount borrowed. If you borrow less, the interest payable will be calculated on a smaller amount resulting in savings. So, although most lenders provide up to 90% of the property’s value as the loan amount, it makes sense to save as much as possible from your end. This will ensure you get approvals faster and also help you save a good amount of money on the home loan interest payable.
3. Channelize Your Bonuses & Incentives Towards Your Home Loan.
Over the tenure of the home loan there is a chance that you will receive bonuses, incentive & appraisals. You can direct these additional gains towards your home loan. This will reduce the principal amount of your home and in turn reduce the amount of interest you have to pay.
4. Reduce Your Housing Loan Interest Rates With Balance Transfers.
Many lenders provide you lowered interest rates when you transfer your loan from your existing lender to them. As long as the savings of a lowered interest rate outweigh the charges and penalties involved with switching your lender, refinance is always a good option. Some lenders will even provide you the a top loan up to Rs. 40 lakh.
These were some of the ways you can reduce the home loan interest rate or the interest payable. The next thing you can do is use your home loan interest to save taxes. Under section 24 of the Indian Income Tax Act, you can save up to Rs. 2, 00,000 annually against the interest part of your home loan repayment. We hope this article has been insightful and will help you save money against your housing loan interest.