How to Save Rs.1 Lakh on Home Loan Repayment

Paying off a home loan can be an expensive affair. Since home loan amounts are usually on the higher side, the mere interest payable on them can add up to a lot. This doesn’t mean that you cannot save out on money. Here are some tips on how you can save money on repaying your home loan.

• Prepay your Loan – Prepaying your loan can help slash your total interest payable considerably. Although this requires an abundance of financial discipline and commitment, the long term effects of prepaying your loan can overshadow the struggle of saving up to do so. However, one must bear in mind the prepayment charges, and other charges that go in hand with preclosing your home loan.
• Ask to Reduce the Interest Rate – Negotiate with your bank on the rates of interest. If you have been a customer with the bank for a while, most banks will oblige to your request. This is sure to help you save on a lot of interest payable depending on the loan amount.
• Do Your Research - It is important to do through research before applying for a home loan. Although two banks may offer similar rates of interest, other fees and charges may vary. Not doing through research before applying for a loan could cost you a lot of money that can otherwise be avoided. With the numerous online marketplaces that are available at a consumer’s convenience, it is now easy to compare home loans and choose the best loan product as per a customer’s requirement.
• Invest Before You Apply for a Loan – Investing your money in various schemes will help you accumulate some money that can be used to making the down payment for your home loan. The larger the amount paid towards down payment, the lesser will be the loan amount. And the lesser the loan amount, the lesser will be the interest payable on the home loan. Therefore, the higher the down payment, the more money you can save on interest payable.
• Transfer the Balance of Your Home Loan – Home loan balance transfer is a process where a bank takes over the home loan from an existing bank. Often times the bank that takes over the loan offer you with a lower interest rate. This is bound to save you on the interest amount over the tenure of the loan. Home loan balance transfer is easy to obtain and effective when it comes to saving on interest.

Although paying off a home loan can be expensive, one can save money on the interest by following the steps mentioned above. Financial commitment is key when it comes to saving money on your home loan. Always remember that prepaying your home loan partially or fully can help you save money as well. However, the most important tip that one can follow to save interest on home loans is invest. Investing money to make a larger down payment will reduce the overall interest paid on the loan. Moreover, it builds discipline in building the financial discipline to save money in future.