How Can New and Existing Borrowers Get The Lowest Home Loan Emi?

When compared to other crucial life goals such as purchasing a vehicle or accumulating your child’s higher education corpus, owning a home is probably the biggest financial commitment in most individual’s lives. Involvement of larger loan amounts and longer tenures often result in home loan EMIs occupying a relatively bigger chunk in most individual’s financial lives and active work life years. However, there can be numerous ways to reduce your home loan EMI burden by availing of low and lucrative Bank of Baroda home loan interest rates.

Explained below are smart ways that can prove to be handy for both existing and prospective home loan borrowers to lower their EMI burden:

• Before taking a home loan: New borrowers

Opt for longer loan tenure

Choosing a longer Bank of Baroda Home loan tenure would imply a lower EMI amount, thus enabling you to repay the loan comfortably without stressing over your finances too much. For example, EMI for Rs 50 lakh home loan @8.5% p.a. and tenure of 10 years would come out to be Rs 61,993. Whereas, if a longer tenure of 25 years is opted for, the EMI will come down to Rs 40,261.

Hence, it would be prudent to make use of the online EMI calculator tool in order to choose the tenure whose corresponding EMI you would be comfortable in repaying.

Remember that while a longer repayment tenure also increases the overall interest cost of the loan, you can consider making prepayments whenever you have a surplus in future. Although RBI has mandated lenders do not to charge prepayment fees in case of floating rate loans, fixed-rate loans may involve such charges. Hence, make sure that the overall benefits in the form of saving in interest cost upon prepayment significantly outweighs prepayment charges, if any.

Go for a bigger down payment

As the Reserve Bank of India (RBI) permits banks or lenders to finance up to 75% to 90% of the property’s cost in the form of a home loan, borrowers need to arrange a minimum of 10–25% as a down payment. However, instead of accumulating just this minimum requirement, try contributing a higher down payment. Doing so is advisable because the higher you contribute from your own pocket, in the form of down payment, the lesser you would need to borrow and repay.

Moreover, contributing a higher down payment would also result in a lower LTV ratio requirement, which would, in turn, boost your loan approval chances for the Bank of Baroda Home loan. However, it is important to make sure you don’t overstretch your finances or hinder the achievement of other vital financial goals while trying to accumulate a larger down payment for a home loan.

Compare amongst various prospective lenders

Another smart move that prospective Bank of Baroda Home loan applicants can make towards lowering their expected home loan EMIs is by comparing amongst various lenders before zeroing in on any. While comparing, factor in parameters such as the interest rate, tenure, processing fee, loan amount, prepayment charges etc. Instead of visiting various lenders’ websites or branches to enquire, consider visiting online financial marketplaces to facilitate such comparison and choose the most suitable lender. Such platforms facilitate comparison amongst the prospective lenders offering home loan basis customer’s financial requirements and eligibility criteria such as customer’s credit score, monthly income etc.

Maintain a good credit score to fetch low rates

A credit score is amongst the most crucial filters factored in a while evaluating your Bank of Baroda Home loan application. A good credit score, considered usually to be 750 and above, can provide an uptick to your loan eligibility and even fetch you lower Bank of Baroda Home Loan Interest Rates. Hence, it is always prudent to review one’s credit score before applying for home loans. This habit also enables those having lower or no credit scores to take the required corrective measures to build/ improve it and then, later on, apply with an improved and good credit score.

Moreover, another vital step is to develop the habit of time to time reviewing credit reports too every month. This habit would allow you sufficient time to make corrective efforts, if required, to improve your credit score and get the errors/discrepancies (if any) rectified at the earliest by the bureau.

• After taking a home loan: Existing borrowers

Opt for home loan balance transfer & get loan tenure extended

Given that a longer repayment tenure leads to a lower EMI amount for Bank of Baroda Home loan, many borrowers who wish to reduce their EMI burden tend to go with the option to consider requesting their lender to extend the loan tenure. However, requesting your lender to extend your loan tenure is considered as home loan restructuring that might come under the rpurview of a rewriting norm and thereby may lead to an adverse impact on your credit score. Therefore, instead of doing so, consider opting for a balance transfer with one of the lowest offers in the form of Bank of Baroda Home loan interest rates, and then opt for a higher tenure instead of continuing with the remaining tenure of the existing home loan.

However, remember that as a longer tenure of Bank of Baroda Home loan would imply higher overall interest cost, try making prepayments whenever you have surplus funds in future. While going for a balance transfer, make sure you also factor in the associated costs levied, as the new lender would consider your switching request as a new home loan application, and therefore levy charges such as processing fees, administrative charges, etc. Only if the overall savings are substantial and outweigh the charges, if any, go ahead with the balance transfer.

Final Words

There’s no doubt in admitting the fact that availing of a home loan is one of the most crucial and big-ticket financial decisions in one’s life. And with higher loan repayment tenure involved in home loans, the overall interest cost is on the higher side. Hence, it becomes imperative for both new as well as existing borrowers to take the right steps in lowering their EMI burden in every possible way, without compromising on one’s financial health.