2 min read
25 May 2021

Having your own home means a sense of security, safety, and comfort. Due to this, home loans are one of the most popular loans in the market because everybody wants a haven that they can call their own.

A financial institution offers a home loan based on the property's value, the borrower's income, current liabilities, and the collateral offered. Usually, the amount of home loan sanctioned is about 80-85% of the home value. This amount is repaid to the lender along with interest through Easy Monthly Instalments (EMIs). Since a home loan is substantial, the tenor is long and can stretch up to 30 years.

While a longer tenor may seem convenient, it has a significant flipside. It significantly increases the cost of the loan in terms of interest payments. If you want to avoid a lifetime worth of EMIs, here are a few ways to reduce the tenor of the loan along with the EMIs.

Lower interest rates

The housing loan interest rate plays a major role in determining the EMI and you should be on the lookout for loans with lower interest rates. Do your research and bargain with your lender. The lower the interest rate, the lower is the repayment burden. A healthy credit score goes a long way in securing a loan at a competitive interest rate.


One of the most effective ways to reduce your home loan EMI and tenor is through prepayment. If you have a sudden extra inflow of cash, through a raise in your salary or a bonus, you can pay back a considerable part of the loan to the lender in one go. This would directly affect the principal amount to be paid, reducing the tenor and thereby the EMI.

Increase the EMI amount

The higher the amount of EMI, the lower is the financial burden of the loan. You should increase the amount of EMI to as much as you can practically afford. This reduces the repayment time and hence the cost of the loan.

You can opt for schemes to eventually increase your EMI payments to match your income increase.

Paying an extra EMI every year

By paying an extra EMI every year, you can bring down the loan tenor and keep a tight lid on the interest outgo as well. Most lenders will not mind accepting an extra EMI at the end of the year. Each year, an extra EMI brings down the principal amount and helps you close a loan earlier than the stipulated tenor.

These are a few practical ways to reduce the financial burden of a home loan. Apply for a home loan with Bajaj Finserv to avail of funds at competitive interest rates. Also, pre-approved offers on a home loan make it easy to avail of finance. You need to share a few basic details and know your pre-approved offers.

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