5 MinsMay 18, 2023
Buying a home is a dream come true for many people, but the process of obtaining a home loan can be overwhelming and stressful. Unfortunately, in recent times, home loan interest rates have been on the rise, which has made it even more challenging for potential home buyers to afford their dream home. As a result, borrowers are now looking for ways to reduce the EMI burden on their home loans. You must always check your home loan eligibility.
Here are a few tips and strategies that can help you reduce this burden and bring you one step closer to purchasing your dream home.
Paying 1 additional EMI every year
A little extra payment can go a long way toward helping you reduce your monthly interest and reduce your EMI burden. Paying an extra home loan EMI on your Axis Bank home loan every year is a practical way to accomplish this. By doing this, you can significantly lower your loan's monthly interest, which will reduce your overall EMI burden.
Increasing your EMIs by 5% every year
As time goes on and your income increases, you may find that you can afford to pay a little more toward your home loan. One effective strategy to reduce your EMI burden and home loan interest is by increasing your EMIs by 5% every year. You can also use a home loan EMI calculator for this purpose. Some of the key benefits of this strategy include
- Reduced interest: By increasing your EMIs, you can reduce the total interest payable over the life of the loan.
- Faster loan repayment: Increasing the amount of your EMIs can help you pay off your home loan faster, allowing you to achieve financial freedom sooner.
- Better credit score: Making regular, on-time payments on your home loan can improve your credit score, making it easier to obtain credit in the future.
[Also Read: Home Loan and Mortgage Loans - What's the difference?]
Using your annual bonus or incentives to repay loans
If you're a home owner with an Axis Bank home loan, you may find that your annual bonus or incentives provide an excellent opportunity to reduce your EMI burden. By using your yearly bonus or incentives to make extra payments towards your loan, you can significantly reduce the interest on your loan and pay off your loan faster than originally planned.
- Determine how much of your bonus or incentives you can afford to use for extra payments towards your loan.
- Contact your bank to find out the process for making extra payments towards your home loan.
- Make sure you understand any prepayment charges or fees associated with making extra payments towards your loan.
- Consider setting up a recurring payment plan to ensure that you make regular extra payments towards your loan.
- Monitor your loan account to ensure that the extra payments are being applied correctly and reduce your outstanding loan amount.
- Repeat this process each year to continue reducing your EMI burden and paying off your home loan faster.
Increasing Home Loan tenure
By increasing your loan tenure, you can spread out your loan payments over a longer period of time, which can lower your monthly EMI payments.
- Contact your bank to find out if you are eligible to extend the tenure of your loan and what the process is for doing so.
- Review your current repayment schedule and calculate the total interest payable on your loan if you were to extend the tenure.
- Use an online EMI calculator to determine how different tenures will affect your monthly payments.
- Based on your calculations, decide how long you would like to extend your loan tenure and what your new EMI payment will be.
- Prepare a new repayment schedule that takes into account the extended tenure and the new EMI payment.
Following the aforementioned strategies can help ease your burden and make you financially stable to afford your dream home. Consider opting for Axis Bank home loans to ensure a hassle-free process in obtaining a loan.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.