Entries by Cody Richards

How to reduce your interest payment on an existing home loan

The home loans normally are of huge amounts, and the interest seems to eat off a huge amount on its own from the income of the person taking the loan. The need for reducing the interest rates on home loans is basically to generate more disposable income.

Before taking the home loan, it is suggested that you do thorough research and find out the bank which offers home loans at the lowest interest rates. If you want to further reduce the payments, here are a few ways.

Switch home loan to MCLR (marginal cost of funds-based lending rate)

The MLCR regime offers better transmission of the policy rates of Reserve Bank Of India and better transparency than the other regimes. It can benefit you with resetting the pre-fixed repayment dates and ensures that the changes in lending rate during the loan tenure gets transmitted to the borrower once the loan’s reset date arrives. If your bank does not allow MCLR, then you can transfer you loan to a bank which offers this facility and benefit from this method.

Opting for home loan overdraft facility

The home loan overdraft facility allows you to deposit external money to your home loan account in addition to the normal EMI. This payment is treated as a pre-payment till the time it is withdrawn. You can keep you extra saving your home loan account and use it only when needed. Otherwise, it adds up to your EMI. Also, when you add more money, your interest payments and loan tenure will get reduced. But, you have to be careful while withdrawing a surplus amount from your home loan account as it will result in an increase of outstanding balance again and have higher loan interest.

Home loan prepayment

 


If you get an opportunity to do pre-payment for your home loan, do not miss it. Paying the loan back early will reduce the interest on home loans automatically. If you win a lottery or get a bonus in the office, you can use it to deposit the EMI early and then you can ease out for the upcoming EMI. This will help you reduce the interest on the home loan as well as make you pay the loan faster.

Compare the rates online regularly

The best way to get the lowest interest rates for home loans today is to surf the internet. Get to know about the various offers from different banks. The existing home loan borrowers should also be researching the internet from time to time to find out how much they are charges and what the market is charging. There are various websites which provide a summarized view of rates of interest, fee and other charges of different lenders. This will help you find a better deal before you opt for any loan.

Tips to Get Approved for a Home Mortgage Loan

Unlike car loans, home loans are quite difficult to obtain. You may get disappointed when your application gets rejected, but if you know the real reasons behind it, you will find it fair enough. Most of the applicants make the mistake of doing their reality check before applying for loans whenever there is an offer. They hope to get clearance on the loan even when there are zero chances of the bank approving it. So if there is a key for taking the home loans, what is it? Proper education is necessary to avoid disappointments of getting your application rejected. Learn how the lender thinks and apply for your loan accordingly.

Know Your Credit Score

Your credit report determines how well you are eligible for taking any credit from any lender. Most of the people forget to review their credit score before applying for home loan, assuming they have a good credit score. A low credit score is your dead-end to getting approval, and it is the most crucial element in getting a mortgage loan. The higher credit score requirements, several missed payments, frequent lateness, and other derogatory credit information can stop mortgage approvals. To have a good credit score, pay your bills on time, lower your debt, and stay on top of your credit reports. Pre-paying your EMIs can also help in improving your credit score.

Save Your Cash

The policies for applying for a home loan keep changing, and if you are planning to apply for a home loan in the near future, today is the day you should start saving. Applying for a loan with zero savings is a straight rejection to your application. Lenders are now more cautious and demand down payments on the EMIs. The higher your downpayment, the lower will be your interest rate on the loan. If you can manage to do 20% down payment to your loan, it not only brings down your loan value, but also alleviates private mortgage insurance or PMI. If you can get rid of PMI, you can enjoy lower, more affordable mortgage payments.Apart from down payments, getting a mortgage also involves closing costs, home inspections, home appraisals, title searches, credit report fees, and other expenses.

Stay at your job

It is necessary for the lender to have trust in you that you will be able to pay back the loan amount. TO deliver that trust, you need a constant source of income, which is job security. You need to have approval from your employer that you can capable of earning money. Quitting your job before applying for home loan can make the lender rethink his decisions on passing your application.

Clear your older debt

To apply for a home loan it is best that you go fresh and free of any previous loan. Your debts will determine if you can take a home loan, as well as the amount you can take from the lender. If you have a lot of debt ratio because of a lot of credit card debt, the lender can turn down your request, because your entire monthly debt payments should not exceed 36% of your gross monthly income.

Tips To Lessen The Interest On Your Home Loan

Repaying the loan that you have taken is certainly a lengthy process because it would certainly take years for you to pay it back. If you don’t work it out properly, the EMI for your home loan would certainly start weighing you down and will also begin to cloud up your budget for other things that you have the money to spend on. If you want to reduce the burden that you are facing every month, you should make sure that you choose the right amount of money that you know you can pay off every month without any hassle. You can also reduce your burden by finding ways to decrease the interest on the loan that you have borrowed. One of the most important things that you should be considering is that you have to find the right lender, one who offers you the lowest interest in the market and also one that ensures that you will not be charged any un-heard of or outrageous interest rates after the loan is granted.

If and when you miss an installment, banks or lenders may inflict some penalties, and sometimes those penalties could be severe. These penalties could be really problematic because, as the person that is paying the loan with interest, trust me, you will have a lot on your head because of the debt, you do not need extra payments weighing you down. You should also make sure to choose a shorter return period depending on how fast you can return the money because, when you choose a longer return period, you are setting yourself up to paying more interest. Banks and other financial organizations that lend money always charge more interest for longer periods of return.

It would be helpful if you use a home loan EMI calculator because it certainly helps you decide on what kind of affordable options you have. And it will also help you make the decision. It is unbelievably easy to use and it 100% accurate and will save you a lot of time and will not make you put in as much effort that you would have put in if you had not used an EMI calculator. It is also something that lets you estimate the EMIs with a lot of combinations and will also let you prepare up your finances according to that.

The most important thing that you need to keep in mind is that you should get used to paying the loan every month. It is essential that you make regular payments and also if possible, pre-payments because it will certainly help you a lot. Most lenders will allow you to start a pre-payment without charging any fees at all.

Tips For People Buying A Home For The First Time

Making a million-dollar or at least a couple hundred thousand dollar decision is undoubtedly nerve-wracking and also a really hard conclusion to make; because you will find so many homes that are in your price range, so it would be best if you went with an option that you absolutely fell in love with. Just like how Monica and Chandler (FRIENDS) fall in love with a house in the suburbs and make an offer on it. They went with their instincts after looking at a couple of houses outside the city. You should do precisely the same, for your satisfaction, you should certainly look at a couple of houses; you might actually end up liking a house. If you don’t like any of them, you should take the help of a realtor and tell them what you are looking for.

In this article, I have implemented some tips that will help you navigate the entire process of buying a home and also a way to help you save money. It will even give you some cautionary tales that will prevent you from committing any common mistakes.

– You should start saving up for the down payment immediately. If you are interested in buying a house that will make you happy, you should absolutely save up a lot of money for the down payment. It is certainly common to pay 20% of the value of the house as a down payment. A lot of lenders have started permitting a lot less than that nowadays.

 

– You should explore many options before you settle on one because this decision will certainly end up costing you a very pretty penny. When you make a higher down payment, it means that you will not have to make costly monthly payments.

– You should initially determine how much money you can afford. By purchasing a home that you cannot afford, you will be inevitably digging yourself into a pit of debt that you will find really hard to dig yourself out of.

– You should make sure that your credit score is impressive. Having a bad credit score will be really problematic because it will not help you get lower interest rates. If you have a good credit score, it means that you are a person that pays their dues in time and that the banks or lenders will be inclined to offer you a decent interest percentage.

– It would be in your best interest for you to compare mortgage rates. A lot of home buyers have found it to be a good idea to get a quote from multiple people before actually signing any documents.

Some Smart Ways To Manage A Home Loan

If you are in the market for a home loan, you should be ready to make a substantial financial statement and commitment to a lender. The lender is the one who would be granting you a loan. The lender can be a financial organization like a bank. When you take a loan from a bank, they will certainly need all of your financial details to evaluate you and to see if you can pay back the loan or not. A home loan is actually a smart way of making a dream that you have of buying a home, into a reality. The point of a home loan is that you should not have to dip into your savings to pay it back. You should actually pay it back in installments with whatever you earn. Here are some things that you should take into consideration.

 


If you can, you should pay a higher EMI. It is a sure way that you can ensure that you will be able to repay the entire loan without facing any sort of penalties. It is a great way to repay it before the tenure ends and also a good way to make sure that you don’t end up paying too much when it comes to interest rates. By doing this, you are shaving off so many months, even years in some cases, off of the repayment period. You should be good at managing your funds. The main objective of dealing with investments and loans would be to increase the flow of cash. You should consider your monthly payments and then see how much money you can spare for the repayment of the loan. You can actually try the partial pre-payment option, because the longer a person takes to pre-pay the loan amount, the more interest they would be charged. The partial pre-payment is one of the best ways that you could lower the interest rates. It also has so many benefits because most banks don’t even charge a fee for this option.

One of the initial things that you need to take into mind is that, you should never choose a bank that would charge higher interests. Look around and make sure that you join a bank that will charge a lower interest rate. There are certainly so many banks that you can look into. You should also make sure that you never make any late payments. If you are supposed to make a payment the 1st day of every month, you should be sure to have that amount ready and in your account by then.

Loans can be tricky things to deal with. All you have to do is stick by the rules and promptly pay it back.