Save Interest Home Loan

save interest on home loanSave interest home loan is an unmatched possession for any individual and every individual dream to own a home for peaceful survival. A huge amount of investment is involved in the massive undertaking of constructing or purchasing a home. Hence to acquire a dream home, most of the people rely on low–interest rate home loans which they take from the banks, housing finance companies, and corporate credit representatives. Now it is an accepted truth that the principal amount of a home loan is higher in comparison to car loans or a personal loans. Hence to repay a home loan is highly taxing for a borrower when repaid through Equated Monthly Instalments or EMI over a given fixed period of time.

At a crucial point, it is more problematic for a borrower when the home loan EMI exceeds higher than 50% of his/her income and at the end of the month, the person faces scarcity of money to invest in other essentials or to pay off the bills. Hence the mortgage advisors give the advice to the borrowers for maintaining a low–debt–to income ratio. A person’s loan EMI in a low–debt–to income ratio is lesser than 50% of the income. Therefore, how can it be ensured that the person’s home loan EMI and interest payments are still affordable? As the calculation of the interest rates is exceptionally based on the principal amount, so when the EMI payments are made higher, then one can repay the home loan much faster and also save on their interest payments.

Making investments in a home gives a guarantee for higher returns as the owner usually holds the property for a longer time period. The borrowers have the tendency to go in for the repayment of a longer period, while they are in their bid for getting a lower home loan interest and EMI. It may produce a reverse compounding effect as the individual gets stuck while they are making more payment in overall interest payments on their home loan. Hence, it is advisable that the clients choose a short duration home loan for repaying the loan quickly. The tips provided below are valuable to fulfill the purpose of the home buyers to repay their home loan principal faster –

  • Higher down payment – When the buyers make a higher down payment while they obtain a home loan, then it is beneficial in the reduction of the principal amount. A lower principal amount is the indication of lower interest as well as EMI payments.
  • Annual Increase in Home Loan EMI – A salaried employee has the option to choose to bring about an increase in repaying the annual home loan EMI by a meager percentage when there is an increase in his/her annual net income. This step can be taken for saving the interest. The increase in the net income of the person should determine the increase in loan payment percentage.
  • Home Loan Repayment – The overall interest payments can be reduced with the opportunity to repay a certain portion of the home loan prior to its tenure ends.
  • Extra EMI payment – Most of the employees receive annual bonuses in addition to their increment which they can easily use to clear an extra EMI for saving the interest as well as to ensure that the home loan is repaid at a faster rate.
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