Tips to reduce interest rate on your home loan

One of the best ways in which you can reduce the interest rate that you could be charged on your home loan would be to go for a longer repayment period. It is common knowledge that the time you take to pay your loan back plays a major role in determining the interest that the lender charges from you in these cases. If you take 25 to 30 years to pay your loan your lender would charge you a lower rate of interest than if you want to pay off the same amount in 10 to 15 years. However, in a longer loan repayment tenure, you would be paying a higher overall interest amount.

 

Go for prepayments 

 

These are also a great option if you are looking to lower your home loan interest rates. This is especially applicable when you have a floating-rate loan as lenders do not charge money for foreclosing or prepaying the loan. So, in case you have availed of such a loan, it is better that you keep making prepayments from time to time. This is because in such a loan in the first few years you would be paying more towards paying off the interest than the principal.

 

Comparing interest rates 

 

This is perhaps the most appropriate way – if not the only one – of getting the home loan with low interest rate that you are looking for in these cases. You must perform proper research in this case and compare the rates before you decide on choosing any particular lender or loan as such. These days, it has become easier to get such information because of the presence of so many third-party websites. Thanks to these service providers you would have a clear idea of the charges and rates levied by various lenders on these loans. 

 

If you are not satisfied with your present lender you can always transfer the loan balance to a better service provider such as Piramal Finance. However, please remember that this would only be applied once you have started to make prepayments on the loan. Usually, people go for this option when they feel that the lender is charging too high an interest rate on the repayment of the loan. The benefit of such a balance transfer is that it helps you switch to a lower interest rate. However, please keep in mind that this should be the last resort in these cases.