A home loan is amongst the costlier undertaking mainly due to its sizable sanction and lengthy tenor. Naturally, when servicing a loan for over a decade or even two, the interest outgo is quite substantial. However, by availing a lower interest rate, you can greatly reduce the total outgo on your home loan and save a lot of money.
Here are few ways to reduce your home loan interest rates.
Consider a home loan balance transfer
A home loan balance transfer is a viable solution as it allows you to switch to a lender with more favourable terms. To ensure the undertaking is actually profitable for you, use the home loan balance transfer calculator before you apply. Even with a much lower rate, transferring too late in the tenor might not be the best decision. The calculator gives you the necessary information to make a smarter decision.
Opt for a floating interest home loan
This is an approach that works before you avail a loan. Considering that home loan interest rates vary based on type, choosing the right type is important. You have the option to pick either a floating or fixed interest rate, and the former has the potential to be more affordable down the line. It is an option that best suits those with a larger risk appetite and has the potential to help you save a lot.
If you can’t lower the interest rate on a home loan, lower your interest outgo. One smart way to do is to make regular partial-prepayments. Prepaying your principal reduces the interest charged on the loan. You can use the home loan part prepayment calculator to calculate exactly how much you can save with each payment.