India’s real estate sector is projected to contribute to 13% of its GDP by 2025. 14 major sectors are responsible for its growth. 26% account for demand for office spaces and 32% for housing schemes introduced in the top 7 cities. Experts claim that housing sectors may double up from the present stock of 1.5 million units built in the city.
Migration for professional needs has been witnessed Tier-1 and Tier-2 cities of India. Owing to the increased demand for housing in the city and the monetary strain it poses to an individual, finances in India are providing best home loan interest rates to eligible candidates. The government has also taken due notice of the situation in accordance with which it has incorporated several housing schemes to benefit such job seekers.
Additionally, the Government of India has made home loans eligible for a tax exemption. Under Section 80C and Section 24(b) of the Income Tax Act of India, borrowers can avail maximum home loan interest tax benefits. The interest incurred against the EMI payment can be claimed as a deduction from their aggregate income up to Rs.2 lakh under Section 24(b). Section 80C allows deduction on investment on residential property of up to Rs.1.5 lakh on the principal amount.
Subsequently, the borrower can opt for certain techniques to lower their home loan interest rate.
Ways to Prevent High-Interest Payment for Home Loans in India
- Home loan balance transfer- The borrower can transfer their existing home loan to another lender or financial institution that offers a reduced home loan interest rate. The new lender may also provide top up on the existing credit for the borrower’s benefit. A substantial amount of home loan interest payment can thereby be reduced as it is one of the top tips to decrease home loan interest.
- Shorter tenor- Borrowers can increase their EMI amount provided the interest margin and the principal amount are on a par. Nonetheless they should avail for a shorter loan tenor in the initial stages itself.
Revise your instalments every year to reduce the burden of heavy interest rates. Creating an alternate source of income or increased earning will enhance the repayment capability of an individual. To do so, increase your EMI payment to repay the unpaid dues faster. In such case, the principal amount may increase, but interest rate component will decrease. Calculate your monthly EMI and rate of interest applicable on the home loan EMI calculator.
- Part prepayments- It is one of the key facilities that lowers the interest rate on home loans. At the beginning of the loan tenor, the larger part of the EMI payments go towards the interest rather than the principal amount. Borrowers can make multiple part prepayments in order to lower the loan principal which will reduce the total interest levied on the borrowed sum. However, it is to be noted that such payment can be done by a borrower with substantial funds to repay a certain portion of the loan principal above and over the EMIs.
You can calculate the impact of such payment before availing this facility through part prepayment calculator.
Hence, the application of the above-mentioned techniques would lower home loan interest rate to a significant amount. With respect to the measures, individuals can undertake feasible housing loans faster.