7 Ways to Reduce Your Home Loan EMI Payments

For many, owning a home is a dream come true, but the journey often comes with its financial challenges. Mostly, the home loan EMI (Equated Monthly Installment) is a significant monthly expense. If you find yourself struggling with your home loan payments or simply want to reduce the financial strain, there are several strategies to consider. We are going to discuss the following seven ways of decreasing home loan EMI here that may shock you because a few are not obvious.

1. Longer Tenure Option

The longer your repayment term is, the smaller your EMI would be. For example, you can extend the tenure from 15 years to 20 years to significantly decrease your EMI.

To decide if extending your loan tenure is right for you, consider using an instant loan appto calculate how different loan terms affect your EMI.

2. Refinance Your Home Loan   

Refinancing your home loan can be a strong way to reduce your monthly EMI payments. In refinancing, you essentially take a new loan with a lower interest rate to pay off your existing loan. Many people do this when interest rates drop or they find a better deal elsewhere.

How to Refinance

Compare interest rates: Use an instant loan appor online platforms to compare rates from different lenders and choose the most competitive one.

• Check for penalties: Ensure there are no hefty prepayment or foreclosure penalties associated with your existing home loan.
• Consider the loan term: Even though refinancing might lower your EMI, you should ensure that the new loan terms are favorable in the long term.

3. Make Part Prepayments or Prepay the Loan

Paying some of the home loan up or doing partial prepayments will reduce your EMI very drastically. Though a minimum amount is required as prepayment by your lender, decreasing the principal loan amount shall save interest and EMI also. Most lenders are ready for part-prepaymentwithout charging excessively.

Prepayment tips:

• Prepayment Charge:Many lenders have a certain penalty on prepayment so confirm all terms.
• You can use the surplus amount from a bonus, tax refund, or the proceeds of sale of any assets to pay a part. 
• Some lenders permit adjustments in the EMI after making a prepayment while some even provide reduction in the tenure of the loan.

4. Switch to a Floating Interest Rate

Many home loans are offered with a fixed interest rate for some period and then switch to a floating rate thereafter. Fixed rates might be costlier in the long run, while floating rates may bring in quite a lot of savings, especially when interest rates in the market go down.

How to Switch

Check with your lender: Some lenders allow you to switch from a fixed to a floating rate at no extra cost, while others may charge a nominal fee.

• Evaluate current market rates: Use an instant loan app or financial websites to assess whether floating rates will result in lower EMIs over the loan tenure.

Floating rates might let you enjoy the lower market rate. For this reason, your EMI could also come down significantly. 

5. Reduce Loan Amount by Leveraging a Larger Down Payment

The more you can pay in advance, the lesser will be the amount you will have to borrow, thus making it easier to manage monthly repayments.

How to Save for a Bigger Down Payment:

Cut down on unnecessary expenses: Evaluate your monthly budget and identify areas where you can save.

Invest for short-term gains: Use short-term investments to generate extra funds for your down payment.

• Leverage a personal loan: If you don’t have enough savings but need to make a large down payment, consider a Doctor Loan(for medical professionals) or an instant loan app to bridge the gap.

6. Consider a Joint Home Loan

This way, the two partners would reduce the EMI burden on one person. A joint home loan, apart from relieving the burden of smaller EMIs on one particular person, also helps partners pool their incomes to possibly qualify for a larger amount with more favorable terms apart from lowering your monthly payments.

Advantages of a Joint Loan:

• Lower EMI: The EMI will be divided between two or more borrowers, and each will pay a smaller portion of the monthly installment.
• Higher loan eligibility: Lenders may be more willing to offer a higher loan amount if multiple incomes are involved.

If you and your spouse, or business partner, are ready to take out a joint home loan for the next house, go for using an instant loan app. This will instantly help in checking eligibility or interest rates for joint loans.

7. Choose Instant Loan App Top-up Loans

If you need additional funds to meet your expenses or make larger prepayments without stretching your budget, you can consider a top-up loan on your existing home loan. Many lenders offer top-up loansthat come with lower interest rates compared to personal loans, allowing you to reduce your overall EMI by consolidating debt.

How Top-Up Loans Work:

• Lower interest rate: The interest rates on top-up loans are relatively lower due to the fact that they are secured against your home.
• Instant disbursal: The instant loan app most of the lenders offer results in quick approval and disbursal of the top-up loan within hours.

A top-up loan can reduce the burden of EMI on your wallet, by helping you pay off some of the high-interest loans and thus consolidating your liabilities into a single, lower-EMI payment.

Conclusion

Reducing your home loan EMI is a combination of smart financial strategies. From choosing a longer loan tenure to refinancing, prepaying, or even using an instant loan app for additional funds, there are several ways to bring down your EMI payments. Bajaj Finserv is one platform that offers flexible financial services that ease the pressure of loan repayments.