How To Reduce Home Loan EMI

How to reduce home loan EMI?

Do you have an existing home loan, or are you looking to apply for a home loan? Then, one thing is for sure: home loan EMI will end up coughing up your monthly budget for a long time.

Many people just like you search for how to reduce home loan EMI the easy way. We always advise housing loan borrowers to check their home loan EMI even before they apply for it because this will help them get a clear idea about how much they need to pay in monthly installments towards the home loan, and then accordingly, can manage their monthly expenses.

You can also use a home loan subsidy calculator to check if you are eligible for any home loan interest subsidy under the PM Awas Yojana scheme. This tool also calculates your home loan EMI.

Don’t worry; we have a number of ways that will guide you on how to reduce home loan EMI.

Tips for reducing home loan EMI for existing home loan borrowers

  • Request For An Extended Tenor

If the home loan tenor means paying reduced EMIs, then it would be better to have the loan repayment tenor extended to lessen the EMI burden. But doing that would mean getting it restricted with your current creditor. And it may be considered as a rewriting norm. It may further affect your loan credibility and CIBIL Score. But you can still request your lender to give you an extended tenor. It can help you reduce your loan EMIs. If it does not, then you can always go for the home loan balance transfer facility.

  • Go For A Home Loan Balance Transfer

If you are an existing home loan customer, then you can go for the home loan balance transfer facility at a lower rate. Opting for a home loan balance transfer from one lender to another may cost 1% of the existing outstanding as the processing charges. If you calculate the amount less than what you can pay as the processing costs, then you can go for it. What’s more, leading lenders also let you enjoy a top-up loan to meet other needs with the facility.

  • Make Part-Prepayments Every Year

You can also make some partial prepayment towards your existing loan every year. It will bring down the rates and EMIs. This way, you will be able to pay off the loan in less number of years. But before you do that, ensure checking out the charges for availing the facility.

  • Negotiate Home Loan Rates With The Repo Rate Cut

Many times, there is a repo rate cut by the Reserve Bank of India. It is done to make home loans and other debts affordable for borrowers. But that does not mean only new customers can make the most of it. Yes, you can request your existing lender to readjust your home loan rates to new rates. It can assist you in reducing your loan burden. But if it does not do, then you can always go for the home loan balance transfer to a lender who is obliging.

Tips for reducing home loan EMI for new home loan borrowers

  • Go For A Longer Home Loan Tenor

New home loan borrowers can reduce their upcoming EMIs by going for a longer tenor. It will not only help reduce your loan EMIs but even increase your loan eligibility. But one thing to remember is that opting for a longer tenor will mean having debt on your head for a long time. And you will also end up paying more as interest charges. But you can manage that by making some prepayments and putting in a bigger down payment.

  • Put Down A Bigger Down Payment

No lender will finance the entire cost of the home that you want to buy, and it may be between 80-90%. The rest needs to be arranged on your own. And it is what is known as the down payment. Most of the lenders would want you to put down at least 20% as the down payment. But you should try to put down as much of a down payment as you can. Why? It will help you start paying lower EMIs on the remaining amount. Suppose you pay a 40% down payment; then you will only need to worry about the remaining 60%. You can always stretch it for a more extended period and pay significantly reduced EMIs. What’s more, if you pay more as a down payment, then it assures the lender of your income. It sanctions the loan application faster, considering you won’t have issues in making timely EMI payments.

  • Ensure To Shop Around For The Best Loan Rates

The next thing that can help you opt for reduced home loan EMIs is checking out multiple home loan offers of lenders. Why? It will help you go for the best one as per your needs and repayment capacity. You can do that by landing on a third-party site. This way, you can know the best available home loan offers and then pick one. It may help you go for the best rates on it and help you save on monthly EMIs.

  • Try Putting It 1-2 Extra EMIs Per Year

If you are a salaried professional, then you must be getting your year bonus, along with the appraisal. You can use the bonus to put down 1-2 extra EMIs per year to reduce your home loan rates and pay lower EMIs. This way, you may be able to clear your loan some months/years before. You can also use the percentage of the appraisal to start paying increased home loan EMIs and reduce the burden.

  • Make Lumpsum Payments Every 1-2 Years

Home loan EMIs are something that will continue to cough up a portion of your income for a long. But if you have some policy or ventures maturing, then you can use the returns to make lumpsum payments towards it every 1-2 years. This way, you will end up saving on interest charges and pay lower EMIs.

  • Go For A PMAY Home Loan And Save On Interest Subsidy

The next thing is that you can apply for a home loan via the Pradhan Mantri Awas Yojana (PMAY) and save up to 6.5% on your home loan interest. This way, you can save up to Rs. 2.67 lakh on interest charges as per your income group. If you are earning between Rs. 6 lakh and Rs. 18 lakh, then you can avail of a home loan of up to Rs.12 lakh to save. The loan amount above Rs. 12 lakh won’t be subsidized. You also need to be aged between 24 and 60 and have a valid Aadhaar number for being eligible. Also, it must be your first pucca home in India to apply for the PMAY scheme. You can find all about Pradhan Mantri Awas Yojana here.

You are now aware of some easy ways to reduce home loan EMI that you can implement to lower your burden without worrying about monthly expenses. 

Written by

Vishal Kangane

Vishal Kangane is a renowned authority in the field of digital marketing and blogging. While working with Bajaj Finance Ltd during his professional career, Vishal got interest in writing about finance niche. And his passion for blogging instantly led to starting of PMAY Calculator in 2020. His in-depth knowledge and insightful analysis about housing finance niche and Government housing schemes, make him a trusted voice for those seeking guidance in navigating their homeownership journey. Vishal's commitment to providing clear, accurate, and helpful information reflects his deep understanding of the financial landscape, making him an invaluable resource for anyone looking to make informed decisions in housing finance.