Mr. Mansoor Alam, a resident of Guntur, Andhra Pradesh, and a Government employee by profession, wanted to apply for a Home Loan.
Although there were no issues in the repayment of the Home Loan as he has planned for it, he still seemed nervous.
Why? He was skeptical because a Home Loan was a liability to run for decades and it was bound to affect other financial goals in his life.
If you are confused whether or not to avail a Home Loan, let’s provide you some smart tips to help you save on interest rates of Home Loan for Government employees.
Easy Tips to Reduce your Home Loan Interest Rates
People are wary of the Home Loan interest rates as it runs for many years and may affect their income and savings. It is one of the many reasons that people don’t want to apply for a Home Loan. However, you can still make your Home Loan affordable by implementing some easy-to-follow tips:
# Pay a Higher Down Payment Amount
No lender is going to give you the full value of the home that you wish to buy! Hence, you need to put in some down payment at the time of loan sanction. Although financial experts will ask you to pay 20% of the total Home Loan amount as the down payment, you can aim to pay more. By making a higher down payment, you can drastically reduce the principal amount. Hence, when you have a reduced principal to repay, you can also enjoy paying lower Home Loan interest rates and EMIs.
# You can Prepay the Home Loan
You must be getting some promotion and bonus each year during the course of your employment which you can use to prepay your existing Home Loan account. By prepaying your Home Loan, you can easily reduce the principal and pay lower Home Loan interest rates and smaller EMIs. Most of the financial lenders do not levy a prepayment charge on a Home Loan these days.
# You can Increase your Home Loan EMIs
Everyone receives a net increase in his/her annual income yearly, and Government employees are no exception. When you get such a pay hike during the course of your Home Loan, you can aim to pay higher Home Loan EMIs. Yes, paying higher Home Loan EMIs will not only reduce the loan principal but even reduce the Home Loan interest rates for Government employees.
# Make Some Additional EMI Payment
Other than increasing the Home Loan EMIs marginally when you get a hike in the salary, you can also try to make some additional EMI payment. Yes, sometimes you need to differentiate between your needs and wants and make a smart decision. You can keep off your upcoming big purchase or family vacation aside and use the money to make extra Home Loan EMI payment. By doing this, you can easily lessen the principal and Home Loan interest rates significantly.
# Opt for the Home Loan Balance Transfer Facility
If you are an existing Home Loan customer and are incapable to implement any of the discussed methods, you can opt for the Home Loan balance transfer facility. In this facility, you can switch your Home Loan account from existing lender to a new lender offering a lower rate and reduce it. What’s more, you also get a top-up loan of up to Rs.50 lakh along with the facility to cover other needs at a reduced rate and lengthier tenor.
The Bottom Line
Since you are now aware of the easy ways to save or reduce the Home Loan interest rates for Government Employees, you can follow it and enjoy the benefits. Happy Home Loan management!