Top Strategies to Reduce Interest Burden on Home Loan Repayments

The interest rate on a home loan is a major determinant in choosing the best home loan. Since the average repayment period on a home loan is 30 years, the interest rate will alone be twice as high and the borrower would have tremendous burdens.

You have to pay more than double the principal sum as the interest rate for a house loan of Rs. 50 Lakhs over a 30-year term. It constitutes a debt burden, as the EMI pays a large amount. So, how will the interest burden decrease over the years after taking a home loan with these specifications?



#1: Higher Down Payment

Your loan cost will be calculated by a down payment. If you make a higher down payment, you can considerably reduce the interest payment efficiency, because you pay interest for less. You may opt to pay more than the minimum down payment threshold to reduce the interest cost of the purchase of your home loan.

#2: Lower Tenure

The term for repayment on a home loan is 30 years. You can choose a longer term to repay the loan to pay less on your home loan EMI. Although this will give you temporary relief, you’ll pay a lot for the long-term interest. Select a tenure that will allow you to pay less and more on the sum of your principal amount. With a smaller loan size, it is possible to select tenure with a reduced interest rate over 10 years.

#3: Using Credit Score to Get Lower Interest Rate

If you seek a home loan for your credit worth assessment, the lenders review your credits. The rate of interest is based on your credit score. 750 and higher credit score is known as a good result. You have the advantage of maintaining low-interest rates of home loans if you have a decent credit score. You will reach a low-interest rate with the lender and lower the burden on the home loan.

#4: Prepayment and Part prepayment

Most banks will pay you in advance and partly on your home loan after the lock-in period has expired, which can be up to a year. You could earn a bonus lump sum or a good increase in promotion as you move on in your career. By using the extra amount to repay the home loan the interest burden may be reduced.

Pre-payment or partial pre-payment on your home loan would not only be paid when you have chosen a floating interest rate. Any percentages of fees paid on loans with a fixed interest rate are paid in advance. The outstanding capital balance can be up to 4 percent.

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#5: Choose the Maximum EMI Amount You Can

Not only can you relief from the debt burden by paying off your house loan early, but it will also help you reduce the interest production. Allocate a large portion of the salary for repayment to minimize tenure and interest.

#6: Transfer Your Home Loan to Another Bank


When the cost of your home loan is higher, you have to look for a borrower who can give you the same loan for lower interest rates, so you can pay a significant sum of money just for interest. This is referred to as the transition of the home loan balance. Most banks give you this option to extend your client base. When you pass the loan in the early stages of the repayment period only then you can make a move. You will also have paid a huge sum of money to interest at the later stage, which would not benefit you after the transfer. Therefore, the transfer of the loan and interest payments by the current lender is a certain percentage of the sum.

#7: Step Up Repayment Facility

Many investors provide this service, which allows you to change your EMI annually based on your sales. This alternative will help you repay the loan faster and then raising the interest payment. For these situations, there is no delay and the EMI payment begins in the first month when the home loan is taken.


For these situations, there is no delay and the EMI payment begins in the first month when the home loan is taken. You should follow the above guidelines to reduce your home loan interest burden. Meanwhile, be sure the sacrifices you be to close the home loan do not impact your family day–spending beforehand.