Convert Your Home Loan into 0% Interest

According to the middle-class family buying, a home is a dream and also an asset. So to save tax a person takes a home loan and fulfil his family’s dreams and also save a lot of money on income tax. As most of you are aware a Home loan is the longest tenure loan and it needs more financial discipline. There are a lot of banks that offer lower home loan interest rates. Although the interest rate is affordable, carrying a home loan tenure is a lot difficult. So it is advisable to close the home loan as soon as possible.

Best Ways To Reduce Home Loan Interest rate

So this blog will give some information on how to reduce home loan interest rates by making small changes and reducing your burden on the home loan. So let’s understand how to reduce the home loan interest rate.

Best Home Loan Deals

Since nowadays home loans are very low at 6.5% but still, there are some banks that give loans between 9% to 12%. Always compare your home loan interest with other banks home loan interest rates. In this way, you will get the best deals on Home loan interest rates also the home loan tenure gets reduced. So let’s compare home loans with some example

Convert your Home Loan in 0% EMI

What if we say to start a SIP of 10% of your EMI, you would get surprised when you see the calculation and the benefits of it. Let’s assume you have taken a home loan of 50,00,000 at an 8% interest rate for 20 years. In such case, the EMI will be 41,822 and the total amount that you would pay at the end of 20 years would be 1,00,37,281 including principal and interest which is 50,37,281 interest and 50,00,000 principal.

So let’s see the magic of compounding using SIP. let’s say you have started a SIP of 5,000 on the same date as of EMI and you keep on paying the SIP for 20 years at the rate of 12% annual returns in a mutual fund. So in this way, you pay an extra 12,00,000 but in return, you would get 49,95,740 at the end of 20years. In this way, you would receive the interest rate that you have paid or you can also say that you have converted your home loan into 0% EMI. So this way you only the principle amount as you have received your interest back.

Pay 1 EMI Extra

As you know a home loan is the longest tenure loan, but you don’t have to worry you can still reduce your home loan. So let’s take another example of how we can reduce home loans by paying 1 EMI extra per year.
Let’s say you have taken a home loan of 50,00,000 at an 8% interest rate for 20 years. In this case, the EMI will be 41,822 and the total amount that you would pay at the end of 20 years would be 1,00,37,281 including principal and interest.

So let’s see the magic of paying 1 EMI extra per year. When you pay 1 EMI extra every year you would save approximately 25,57,190 and also your loan will get closed in approximately 15 years. So by paying 7,10,974 you would save 25,57,190 on interest and reduce your tenure by approximately 5 years. Also if you get some extra cash like a bonus, Diwali gift or something else you can also add this amount against your loan and even this will help to reduce your home loan interest rate and tenure

Always take a shorter loan

As mentioned earlier, home tenure is one of the longest tenure loans of 20 to 25 or sometimes 30 years also. By taking this long tenure loan it will only reduce monthly EMI but increase interest amount. But when you calculate and by increasing the EMI amount by a few hundred or some time thousand also you can reduce your tenure up to 15 years.