1. Opt for Repo-Rate-Linked Loans

• Repo-rate-linked loans are tied directly to the Reserve Bank of India's (RBI) repo rate.
• When the repo rate drops, your home loan interest rate decreases automatically.
• Always check if your lender offers this facility, as it ensures you benefit from any rate cuts in the economy.

Repo-Rate Definition

2. Make Prepayments Whenever Possible

• Prepaying even a small portion of your home loan can reduce the outstanding principal, directly lowering interest costs.
• Target prepayments early in the tenure when the interest portion of your EMI is the highest.
• Most lenders do not charge prepayment penalties on floating-rate loans, so use this to your advantage.

3. Switch to a Shorter Tenure

• While shorter tenures result in higher EMIs, they drastically reduce the total interest you pay over time.
• For example, a 20-year loan tenure will accrue more interest than a 10-year tenure.
• If possible, consider adjusting your repayment plan to pay off your loan faster.

4. Increase Your EMI Amount Gradually

• As your income grows, use the opportunity to increase your EMI contributions.
• A higher EMI reduces your outstanding balance faster, directly impacting interest savings.
• Many lenders allow borrowers to revise EMI amounts annually.

5. Transfer Your Loan to a Lower-Rate Lender

• If your current lender offers higher interest rates, explore transferring your loan to a different lender with lower rates.
• This process, known as a balance transfer, can save you lakhs over the loan tenure.
• Before switching, consider the associated costs, such as processing fees, and ensure the savings outweigh the expenses.

6. Park Surplus Funds in Super Saver Home Loans

• Super saver home loans let you link a savings account to your home loan.
• The funds in this account offset the loan principal, reducing interest calculations.
• This is an excellent option if you frequently have surplus funds or variable income.

7. Choose Floating Over Fixed Rates

• Floating interest rates are usually lower than fixed rates and can decrease further when market rates fall.
• Fixed rates are stable but tend to be higher, making floating rates a better choice for long-term savings.

Floating Vs. Fixed Rates

8. Negotiate with Your Lender

• Don't hesitate to ask your lender for a lower interest rate, especially if you've been a responsible borrower.
• Highlight a good credit score (750 or higher), timely payments, and other positive financial indicators to strengthen your case.

9. Monitor Market Trends

• Interest rates fluctuate based on economic conditions and RBI policies.
• Stay informed about repo rate changes and budget announcements that might impact rates.

10. Avoid Delayed Payments

• Late payments can attract penalties and higher interest rates.
• Set up auto-debit for your EMI to ensure timely payments and maintain a good credit score.

Credit Score Range