5 Hacks use to Reduce EMI on Home Loan


Many Indians have taken or are planning to take a home loan, this is a financial liability that usually lasts for years owing to the longer repayment periods. Its monthly repayment can put a strain on your financial planning, but you can save money on home loans by reducing your EMI amount. In the current pandemic situation, where people are working with pay-cuts or are on furloughs, reducing the EMI amount will help with finances significantly. Here are some of the ways through which you can lower your EMI amount.

  1. Higher Down Payment: If you are planning to buy a home or construct one, then there are high chances that you have been saving some money for a down payment and financing the remaining amount via a home loan. If you make a higher down payment by stretching your capability, then you will end up paying a lower EMI every month. You can work out your monthly instalment using Cred’s home loan calculator.
  2. Pre-Payment: There are some lenders who charge a prepayment fee. But, today, many of them do not have any prepayment charges, and you can take advantage of this. If you pre-pay a certain amount at regular intervals, then the interest payment and the EMI amount will reduce significantly over the course of the loan. It will be better if you prepay at the beginning of the repayment period. Every time you receive a variable pay with your salary or an annual bonus, or a hike in salary, you can use it for making a partial prepayment.
  3. Longer Tenor: Home loans have this advantage over other types of loans, wherein you can choose to have a longer repayment period. The maximum tenor is usually 25 to 30 years, and it varies from one lender to another. This should be one of the last options to reduce the EMI as a longer tenor does bring down your EMI, but it increases your overall interest outgo. You can check your eligibility using home loan eligibility calculator.
  4. Prefer Your Existing Bank: You must be banking with a certain institution for some years now, and the same bank would be an ideal option for your home loan. This will translate to paying a lower interest amount if you can negotiate the interest rate on your home loan. This is only possible when you have a good working relationship with your bank and you are their loyal customer. A lower interest rate will translate to a lower EMI amount for your home loan.

  1. Switch Lenders: If you have already taken a home loan, but the lender charges a very high interest rate, then you should probably change your lender to one offering lucrative interest rates. If you can’t find a lender offering a significantly low interest rate, then look for one providing a longer tenor, which will reduce your EMI amount. Before switching to a new lender, it is advisable to gauge the correct EMI amount using Cred’s home loan EMI calculator.

These are some innovative hacks using which you can reduce your monthly liability of the EMI amount on your home loan. Compare different home loan options and then decide on a lender to get the best deal.