Introduction
Owning a home is a dream for many, and home loans are a popular financing option for purchasing a new house. However, the burden of high-interest rates and hidden charges can make the final cost significantly higher than expected. In this article, we will discuss five smart ways to ease your home loan repayment burden and save money.
1. Keep Shorter Loan Repayment Tenure
It is advisable to keep your loan repayment tenure as short as possible. A shorter tenure saves you from paying excessive interest and helps you pay off your debt sooner. The longer the loan tenure, the higher the interest burden due to compounding. For example, a Rs. 50 lakh home loan at 9% interest for 10 years will incur Rs. 26 lakh in total interest. Extending the tenure to 15 years increases the interest to Rs. 41 lakh. Additionally, a shorter loan tenure accelerates homeownership.
2. Consider Refinancing Your Home Loan
Monitor the latest interest rates from different lenders. Refinancing your home loan with a lender offering lower rates can reduce your EMIs and shorten the loan tenure. This can lead to significant savings over the loan period.
3. Invest in Schemes with Higher ROI Before Applying for a Loan
Save for the down payment by investing in high-return schemes. A larger down payment reduces the loan amount and the total interest payable. This strategy helps in lowering your monthly financial burden and overall interest costs.
Suggested Read: What are the Tax Benefits on Home Loan?
4. Prepay Your Loan
Increasing your EMIs as your income rises can help prepay your loan faster, reducing the total interest paid. For instance, a 5% annual salary hike can allow you to increase your EMI by the same percentage, potentially shortening a 20-year loan tenure by nearly eight years. However, be mindful of prepayment penalties and other associated costs.
5. Consider Taking a Joint Home Loan
The Indian government offers an interest deduction of up to Rs. 2 lakh on home loans. With rising property prices, the average home loan amount has increased. At a 9% interest rate, the annual interest on a Rs. 50 lakh home loan for 20 years is around Rs. 4.5 lakh. If you have a working spouse, a joint home loan allows both individuals to claim a Rs. 2 lakh deduction each, totaling Rs. 4 lakh.
Also Read: Best Bank For Home Loan in India
OneNDF: Your Trusted Partner for Home Loans
OneNDF, an online loan marketplace, has emerged as a leading financial services firm for secured loans. It has helped thousands of borrowers secure the best deals, offering relief from processing charges, simplifying loan processes, and providing flexible repayment tenures. Whether you are looking for a new home loan or refinancing options, OneNDF is your go-to destination. Visit OneNDF today to learn how numerous businesses credit their success to our platform.
