How to Reduce Home Loan EMI

A Home Loan is a sizeable loan with an extended repayment tenor of up to 30 years. In other words, the EMIs you pay towards loan repayment stretch over a long period of time, which makes it crucial that the EMI amount is comfortable to bear, considering your income and expenses.

If you wish to reduce your EMI amount – be it to make room for other expenses, save more, or simply to reduce your overall interest outflow – there are a number of ways you can go about it.

• Reduce your EMI by reducing the interest payable: Transfer your Home Loan to another lender and use the opportunity to renegotiate the terms of your loan
• Prepay a part of your Home Loan: When your principal amount reduces, you can use the benefit to either reduce your tenor or your EMI

Use a Home Loan EMI Calculator to understand how a different interest rate, loan amount, or tenor can affect your EMI.

1. Negotiate for Better Terms

Based on your existing relationship with your lender and your repayment track record, you can request for a lower Home Loan interest rate. This would imply a direct EMI reduction, so much so that you could later find out how to reduce Home Loan tenor and still stay on budget.

2. Refinance your Home Loan

Before opting for a Home Loan Balance Transfer, however, do a cost-benefit analysis to verify that your interest savings outweigh the balance transfer costs.

3. Make Part-Prepayments

When you make a prepayment, you pay a portion of the principal early, bringing down the overall outstanding amount, thereby reducing the EMI or the tenor eventually. 

• Reducing your EMI will give you immediate cash in hand, making repayment more comfortable every month
• Reducing your tenor will not only help you become debt-free quicker, but it enables you to save more in terms of the overall interest outflow on the loan

1. Select the Best Lender

Scout for a lender offering the lowest Home Loan interest rate. It is a good idea to research and compare other fees and charges as well

2. Pick the Right Loan

Opting for a floating-rate loan makes it possible for you to benefit when the interest rate dips. Bajaj Housing Finance also offers external benchmark linked home loans, such as repo rate linked interest rates.

3. Make a Larger Down Payment

Lenders finance up to 75–90% of the property’s value, leaving the balance 10–25% for you to service by means of a down payment. While you must bear this amount, it is always a good idea to see if you can pay more. A lower loan amount will translate to lower EMIs or a shorter tenor, or both. More importantly, you save on the interest you would have otherwise paid on the amount.

4. Choose a Long Tenor

When you avail of a housing loan, you have the choice to opt for a long tenor to make your EMIs small. However, to avoid overpaying, assess if you can manage slightly larger EMIs. The idea is that a smaller tenor implies a lower net interest payment, though it increases your EMI amount.

*Terms and conditions apply