People waiting for the EMI of the home loan to decrease were a big relief on 7 February. RBI has reduced the repo rate from 6.5 per cent to 6.25 per cent. After this, banks will reduce the interest rate of home loan. The RBI started raising the repo rate in 2020. He had increased the repo rate by 7 times to control the inflation. This increased the EMI of home loan significantly. Now the EMI of people taking home loans will decrease. Experts say that you can reduce the expenditure on home loan interest in 5 ways.
1. Make more down payment
Bank (Bank) And NBFC (NBFC) Customers give a large part of the price of the house as a loan. This can be up to 85-90 percent. Customers have to pay the remaining money from their pockets. This is called down payment. Experts say it is prudent to make more down payment. This will have to pay less money in the form of interest. Since the home loan period is high, the customer has to pay the interest for many years. The customer’s loan amount will be reduced if there is more down payment. This will also reduce the expenditure on interest.
2. Pre-pay the loan amount
Pre-payment is reduced by preparing some part of the loan amount. Pre-payment of some part every year makes a big difference. Your home loan ends soon. This also reduces the expenditure on interest. If you do a job, you will get increment every year. You will also get a bonus. You can use a part of the bonus for the pre-payment of the loan. You can also increase the amount of EMI if you have a good increment.
3. Make a good credit score
Banks give loans to those who have good credit scores at a low interest rate. The reason for this is that banks are not afraid of drowning such loans. Customers with excellent credit score may demand a concession in interest rate from the bank. Every bank is interested in giving loans to customers with more credit scores. So if your credit score is very good then you will get a loan easily. Also, the bank will also concession in interest rate.
4. Get loan transfer
If your bank is charging a higher interest rate on your home loan, then you can transfer your home loan to another bank. For this, you will have to study the interest rate of home loan of other banks. If the record of your loan payment is good, then the second bank may allow you to transfer the loan. However, it has to be kept in mind that the loan transfer will be beneficial only after getting good concession in the interest rate.
Also read: How much will your home loan EMI be reduced due to reduced interest rate? Understand complete calculation here
5. Select floating rate loan
A loan with floating rate is beneficial against the fixed rate. The reason for this is that the interest rate of the loan also changes when there is a change in the benchmark rate in this loan. If the benchmark rate of a home loan is repo, then the EMI of the home loan will decrease if the repo decreases. However, EMI will increase if the repo rate increases. However, the government usually try to keep the repo rate low. This gives the industry a loan at a lower rate, which promotes the growth of the economy.