How to reduce home loan EMIs? 5 simple moves for big savings | Mint

The Reserve Bank of India (RBI) has recently reduced the repo rate by 50 basis points. This gives the home loan borrowers a timely chance to recheck, replan and decide on their repayment strategies.

In such a case lowering your Equated Monthly Instalments (EMIs) can immensely ease your financial burden and result in significant interest savings over time. This write-up is dedicated towards discussing five efficient methods to help home loan borrowers to bring down and reduce their overall home loan EMIs.

1. Planning, deciding and refinancing your home loan

Planning and refinancing or transferring your home loan from your current lender to another lender providing you lower interest rates can decrease your EMIs substantially. This particular strategy is immensely beneficial if your current home loan lenders rates are particularly higher than the ongoing market rates.

For example, PNB Housing Finance offers balance transfer at competitive rates starting from 8.75% for tenures up to 30 years. Hence, considering a balance transfer to lenders such as PNB Housing Finance can be an efficient method to lower your overall interest burden.

Note: The interest rates discussed above are illustrative only. For the updated terms, conditions and EMI terms consider reaching out to your respective financial institution.

2. Write down, discuss and make partial pre-payments

You should clearly write down details of your pending partial prepayment. Post the same you should utilise surplus funds, bonuses, tax refunds, savings etc., to make partial pre-payments after discussing it with your certified finance professional. This can go a long way in helping you bring down your outstanding principal thus assisting you in lowering your overall EMIs and the total interest that is payable. Leading banks and financial institutions such as HDFC Bank, ICICI Bank allow pre-payments without penalties for floating rate loans.

3. Understand your repayment capabilities

Upon clearly discussing with your lender you can look to extend your loan tenure as well. Now extending your personal loan tenure can help you in decreasing your monthly EMI pressure by ensuring that your repayments are spread over a longer period of time.

Still, this can easily increase the total interest you pay over the entire lifespan of your loan. For example, extending a 20-year loan to 25-years can help you in reducing EMIs but still result in higher overall interest.

4. Boost your EMI amount

Now, in case your financial situation improves, then you can look to shorten your loan tenure. This can be done by considering increasing your EMI payments. That is why, paying more than the minimum required amount can shorten your loan tenure and reduce the total interest paid. It is important to acknowledge that even a modest annual increase in EMI can boost your financial prosperity, transform your finances and result in substantial savings.

5. Go for a step-up EMI plan

When you start with lower EMI payments that eventually increase over time, this kind of repayment process is known as Step-up EMI plans. The growth in EMIs in such plans take place in consonance with the expectation of increase in income growth itself. If a borrower opts for such plans then it facilitates higher payments in later years with manageable initial EMIs. It also helps in efficiently bringing down the loan tenure and the overall interest and debt burden.

Hence, by thinking, discussing with certified finance professionals and implementing these simple yet powerful strategies, borrowers can efficiently manage their home loan repayments and reduce their EMIs on home loans, thus ensuring financial prosperity, economic stability along with consistent savings on a long term basis.

Disclaimer: This article is intended for informational purposes only and should not be construed as financial advice. Readers are advised to consult with their bank or a certified financial advisor for proper guidance and the latest loan terms.