A home loan is a long-term financial commitment. Hence, individuals need to plan the repayment and overall financials beforehand. It allows them to bear other liabilities without burdening their monthly budget.
Moreover, it is the interest payable that determines the affordability of a home loan. Therefore, intending borrowers should access an online home loan interest calculator and estimate the total borrowing cost and monthly payment conveniently.
A step-by-step guide on how to use a home loan interest calculator
Using a online home loan interest rate calculator is easy as it only requires three inputs; here are the steps one can follow to use such financial tools –
Step 1: Visit a lenders’ website
Step 2: Search for an interest rate calculator
Step 3: Enter loan amount, tenor, and interest rate
Step 4: Get the results instantly
On providing the inputs, one can check the total interest payable, total outstanding, and EMIs. Moving ahead, being aware of these details in advance allows individuals to plan their finances accordingly. Simultaneously, they can also work to lower their total home loan interest payable.
Tips to reduce the total interest payable on a home loan
Here are some tips on how to reduce the total interest payment of a housing loan –
- Make a higher down payment
Financiers approve a percentage of a property’s total market value as a loan, and the remaining an applicant has to arrange as a down payment. A higher down payment here has a direct impact on the principal amount. When an individual makes a high down payment, the loan principal amount reduces, which also lowers the total interest payment.
- Opt for a shorter tenor
Opting for a shorter tenor can also help to reduce the total interest burden of a home loan. However, a point to remember here is that, a shorter tenor will increase the EMIs. Hence, prospective borrowers can use a housing loan interest calculator to find a suitable tenor that will find a balance between the two.
- Make prepayments
One of the valuable tips to reduce the interest payable on a home loan is by making a prepayment. Individuals can use their extra cash inflow for this purpose. Making prepayments reduces the loan principal amount, thus, lowers the total interest burden as well and the home loan EMIs.
- Negotiate with a lender
A higher credit score offers the leverage of negotiation. Hence, borrowers can talk to their financier and secure a competitive interest rate, which will also lower their total interest payment. In this regard, they should also know what the best credit score for home loans is.
- Opt for a balance transfer
Another tip to reduce the home loan interest burden is opting for a balance transfer. There are several benefits of a home loan balance transfer. Still, individuals need to be careful if they opt for a balance transfer, as timing here is crucial. Additionally, they need to assess all the associated costs and weigh in the benefits before opting for this facility.
Besides access to online devices like these, leading financial institutions extend pre-approved offers for existing borrowers. This offer expedites the documentation process and saves time. Financiers allow individuals to avail of the offer in various financial products such as home loans, loans against property, etc. Individuals can now check their pre-approved offers by submitting contact information. Using a home loan interest calculator before opting for credit can help individuals to compare different loan offers. Based on that comparison, they can find a lender who can provide a loan deal that will meet their requirements and suit their affordability.