In
the current financial year, the housing credit in India is expected to record a
17-19% growth. This growth can be attributed to several factors like financial
institutions lowering their home loan interest rates, affordable housing
schemes announced by the government, etc.
However, availing more housing
credits leads to an increase in the debt burden for individuals. Thus, if you
avail a home loan, you must aim to repay the debt as soon as possible. To that
end, you can cut back on your interest payments through the following two
methods.
1. Through home loan balance
transfer
You
can avail a home loan balance transfer to reduce the quantum of your interest
payment. Balance transfer entails shifting your outstanding loan amount from
one lender to another. But before availing it, you must know everything about
home loan balance transfer.
Suppose,
you have availed a home loan from a particular financial institution and
purchased a house with the advance. But when you start making the payments, you
find that another lender is offering credit at a much lowest home loan interest rate in India. In
this case, you can shift your outstanding debt to the second lender and avail
the lower interest rate.
However,
when you make the transfer, there are certain additional charges that are
levied by the lender. So, before opting for the home loan balance transfer,
make sure you calculate the total amount you have to pay to the new lender.
Also, make use of a loan EMI calculator to determine the EMI amount you need to
pay to the new financial institution, to facilitate better financial planning
for the future.
Benefits of home loan balance
transfer
There
are many reasons for which you should opt for a home loan balance transfer
facility. These include-
●
You can lower your monthly EMI repayment by availing this
facility.
●
Availing housing loan balance transfer
can help you negotiate with your new lender regarding interest rates.
●
You can also opt for this facility if you are not satisfied with
the services of your current loan provider.
●
You can increase your tenor when you avail of this facility.
●
There are financial institutions that offer additional benefits like top up
loans when you avail the transfer facility.
2. By prepaying your home loan
Another
way through which you can reduce our home loan interest payment and tenor is by
prepaying a certain percentage of your home loan. When you avail the facility
of part prepayment on your advance, your repayment burden decreases in the
later part of your tenor.
When
you want to avail prepayment facilities for your loan, you need to keep the
following things in mind.
●
Since you are planning to pay your housing loan faster than
initially planned, you need to inform your lender beforehand about it.
●
Most financial lenders levy a charge if you choose to prepay your
loan amount. So check how much you need to pay to your lender beforehand.
Tips
for prepayment of your loan-
●
Make the prepayment plans early on in your loan tenor.
●
Obtain an acknowledgement letter from your lender.
●
Check the home loan interest tax benefits before deciding to
prepay your loan.
●
Check all the documents required to avail the benefits of the
prepayment facility beforehand.
If
you keep the above information in mind before prepaying your home loan, you can
make sure that there are no hassles with the process. Also, ensure that your
lender provides the facilities of balance transfer and prepayment before
availing the advance.
