A National Housing Bank report indicates that property prices in India rose by 6% between Q4 2018 compared to the previous year.

At such a time when housing is becoming increasingly challenging to afford, cheap, and hassle-free home loans provide a simple source of funding for property purchases. Further, a home loan repayment calculator, available online, can show aspiring property owners their EMI schedule before availing the credit.

Still, the repayment process often becomes a deterrent for individuals looking to purchase a home. Listed below are a few steps to reduce your financial liability arising from such home loans.

Tips to reduce your home loan burden

• Never neglect research

One of the most common mistakes that borrowers make when availing home loans is to apply for an available loan offer without comparing terms available from other housing finance companies.

Instead, as a borrower, you should consider carefully the types of home loans that you can choose from, do thorough market research, and opt for a loan that best benefits their requirements. Moreover, use the home loan repayment calculator to determine the exact monthly installments for a said loan. The easiest way to research housing credit is to go online. You can find several options.

• Diversify your source of income

Whether you are salaried or a self-employed individual, relying on your primary source of income only is often the problem. If you fail to reduce the housing loan EMIs, you can instead try to increase your income by investing.

For instance, fixed deposits, mutual funds, and equities are profitable investment options that can easily reduce your repayment burden by helping you build a substantial corpus for part prepayments, or better, for a foreclosure. Keep in mind that better monthly income will also improve your eligibility to avail the loan at higher EMIs and lower tenor. Doing so will reduce the overall cost of loans drastically improve the available loan sum.

• Loan prepayment

Prepayment of a loan refers to paying off a certain outstanding amount prematurely. Doing so results in lower equated monthly installments. Nonetheless, prepaying a loan can be tricky since you need a considerable amount of funds to pay a portion of the credit. Ensure you keep all of these factors in mind when prepaying your home loan.

• Opt for a lower rate of interest

Lenders will check your CIBIL score when approving loans. Individuals with an impressive credit score are always eligible for home loans at attractive interest rates. Apart from the credit rating, here are a few pointers to consider so that you can avail of housing loans at reduced rates of interest.

• Increasing your income is another way to lower the rate of interest. Higher earnings indicate that an individual is capable of repaying loans without default.
• Keep your FOIR or fixed obligation to income ratio low. A low FOIR means that you more residual income and can, therefore, accommodate a loan better. Further, before acquiring a loan, you should pay off existing debts. This should significantly reduce your burden for home loan repayment options.

If you take care of these factors, finding a loan with reduced interest rates should not be difficult.

• Choose longer tenor

When considering home loan repayment options to reduce EMI burdens, increasing the tenor is the simplest option. As the time to repay the said debt increases, your monthly installments reduce. Still, keep in mind that the tenor increase also raises the total interest payable on the loan. Note that, if you repay the home loan at reduced EMIs for a longer tenor, you may actually end up paying more as the interest than the principal.

While you can follow any of the methods mentioned above, ensure you never fail to repay your home loan EMI. Defaulting on your home loan EMI can negatively affect the CIBIL score, attract penalty charges, and more.

If a home loan seems unaffordable at first, check whether you can lower your obligations. Moreover, consider carefully how much you need from the lender and what portion of the property price you can pay from your pockets.