Are you looking to apply for a home loan soon? First, you should review your monthly expenses to determine the principal you can afford to borrow and a favourable tenure. Then, approach a lender for loan initiation at a specific rate based on your credit score.
Following a few measures, you can reduce the EMI payments and manage the debt effortlessly. Consider going through this descriptive analysis for such tips. Finally, you will see how Axis Bank home loan interest rate is crafted to favour loan repayments over variable tenures.
What Tips Can You Follow To Cut Down Home Loan Interest Rates?
Here we have summarised 7 effective methods that you may consider implementing to curb your home loan interest:
1. Prepay Loans if Possible
If you have a stable earning source and favourable financial circumstances, consider repaying extra money at times. Prepayment is an excellent strategy to bring down both interest rates and liability period if you have entered into a floating interest rate loan relationship.
As the borrower strives to reduce the principal amount right from the beginning, the outstanding balance reduces much faster, consequently lowering the EMIs. However, confirm first whether your lender allows a prepayment feature or not. You must pay a surplus penalty as a foreclosure fee if the lender does not allow it.
2. Increase the Down Payment Amount
Financial institutions agree on lending up to 90% of the property value when borrowers with healthy credit scores approach them. However, financial advisors strongly advise furnishing hefty down payments, if possible more than 25% of the asset value.
It helps bring down the net payable principle and remarkably lowers the EMI. In addition, you may negotiate with the lender to get a better interest rate when you make a larger down payment.
3. Avail Balance Transfer Facility If Required
Again, this facility is subject to the discretion of a few specific lenders. However, many lenders like Axis Bank offer this facility to people furnishing prepayments against their borrowed sum. You can use this service to repay the remaining balance at a lower interest rate.
When you opt for refinancing, you purposefully enter into a new business relationship with another financial organisation. However, consider every minute aspect before choosing another lender, as delay in making EMI payments after opting for refinancing will attract sizeable penalties.
4. Maintain a Healthy CIBIL Score
A decent credit score of more than 700 will ensure a smooth loan approval process. Moreover, the lender will offer you a loan at a preferential interest rate. On the other hand, if you have an average credit score, say between 500 and 600, you may have to negotiate for better rates. Banks or NBFCs may or may not approve such requests based on your past business relationship with that lender.
5. Stick to a Short-Term Loan
Loan tenure is one of the critical determinants of how much interest you may have to bear over principal repayment. It might seem a convenient option to choose a considerably longer tenure as you will require paying low EMIs.
But if you calculate the cumulative interest, it will be much more significant than that which would have accumulated in the short term, say 10 years. Checking the payable interest online is relatively easy. If you want to calculate Axis Bank home loan interest rate, visit their site and use the home loan calculator feature to get precise results.
6. Do Not Hesitate to Negotiate
When you have made a sizeable down payment and already share a fruitful relationship with the lender, feel free to negotiate. It is one of the well-proven ways to eventually lock the deal at a more attractive interest rate and favourable tenure.
If your lender refuses to lower the interest rate further, you may choose the option of balance transfer by furnishing an upfront rate of interest conversion fee. Provided you have chosen to enter a floating-rate home loan relationship and have already started repaying, you are eligible to take advantage of the balance transfer feature.
7. Consider Arranging the Repayable Amount by Investing in SIPs
Investing monthly in SIPs generates a sense of financial discipline and helps to lighten the financial burden. When you purposefully start saving money with an end goal, you do not need to compromise on other aspects of your lifestyle. The best part about most of these investment tools is you can withdraw your funds anytime, evaluate the managed funds' performance, reinvest your money, and generate even greater profits.
How Availing a Home Loan From Axis Bank Can Be Beneficial For You?
Axis Bank offers home loans at attractive interest rates to self-employed consumers and salaried professionals. For example, if you choose a floating-rate home loan, based on your CIBIL score and down payment, the applicable interest rates can be as low as 8.60%.
Even if you do not intend to make prepayments or partial payments frequently, the Axis Bank home loan interest rate is much lower for fixed-rate loans (currently around 14%). However, this may be altered depending on the asset value and credit assessment.
Once you are convinced about proceeding with the loan, check the documents required for home loan application by visiting the official website of Axis Bank or contacting their loan agents.
Purchasing a home loan and managing the EMI payments is a responsibility that needs to be seriously dealt with. If you wish to avoid feeling pressured by the loan burden, ensure following the above-mentioned steps. Finally, whatever lender you choose, read their loan policies thoroughly before signing and submitting the papers.