Taking up Kotak Mahindra Bank Home Loan or home loan from other lenders have become one of the most popular ways of availing a dream home early in life without having to wait for years to accumulate a sizable amount for purchase of home or property at later stages of life. However, note that big-ticket loan amounts and long term repayment tenures of home loans often consume a considerable amount of the borrowers’ income, which often leave them with extremely little funds to meet their other pleasures and crucial long term financial goals in life. Moreover, any upward movement of home loan rates can furthermore hamper the financial health of such borrowers for the long term.
As an applicant for a home loan, you must know that Kotak Mahindra bank home loan interest rates or interest rates of other home loan lenders play a vital role in helping one select the correct lenders and even for deciding the appropriate EMI. With the availability of longer home loan repayment tenures going up to 30 years, one might end up repaying significantly much more than the actual principal amount. To make sure that you pay just the minimum possible amount, you must make use of certain crucial tips for repaying your home loan faster.
Here, we will state some smart tips for the Kotak Mahindra home loan borrowers or other home loan borrowers on how they can lower their home loan EMI burden.
Ways how Kotak Mahindra Bank Home Loan existing borrowers or other home loan existing borrowers can reduce their EMI burden:
Opt for home loan balance transfer option & choose for an extension in loan repayment tenure
As longer repayment tenures result in lower EMI, extending the loan repayment tenure can lead to a lower EMI burden. But note that loan repayment extension with existing home loan lenders is a kind of loan restructuring option, which massively impacts your credit score as well as future loan eligibility prospects. In place, borrowers must choose the home balance transfer option at a comparatively reduced rate and longer repayment loan tenure.
For example, suppose you have taken up a Kotak Mahindra Bank home loan of nearly Rs 45 lakh around 5 years back at Kotak Mahindra Bank home loan interest rates of 8% p.a at a repayment tenure of 20 years wherein EMI equals Rs 37,640. Currently, your outstanding home loan amount equals Rs 39.39 lakh with a repayment tenure of just 15 years left.
At this stage, if you choose to opt for the Home Loan Balance Transfer option to another lender at an home loan interest rate of 7% p.a. for the left repayment tenure of 15 years, your EMI would go down to Rs 35,405. For the ones choosing a longer repayment tenure of 25 years, their EMI would come down to Rs 27,840. However, as longer repayment tenure results in a higher overall interest component, borrowers must try and prepay their home loan whenever they avail of any surplus funds in the future.
Remember that as a home loan balance transfer request is looked upon to be a fresh home loan application by new lenders, they might charge various charges such as administrative fees, processing fees etc., in the course of loan processing. Thus, consider factoring in the linked costs before you opt for the balance transfer option. Choose this option only if your saving interest component considerably outweighs the balance transfer cost.
For new borrowers
Select longer repayment tenure
Opting for longer repayment loan tenure when submitting an application not just lowers one’s EMI outgo but even results in enhancement of loan eligibility. However, as longer repayment tenure enhances one’s overall interest cost, borrowers must opt for prepaying as and when they avail of any surplus funds in the future. Note that for floating interest rate loans, RBI has debarred lenders, including Kotak Mahindra Bank home loan, from charging prepayment or foreclosure fees, while in the case of fixed interest rate loans, lenders might levy prepayment/foreclosure charges. Make sure to take the help of online EMI calculators for knowing your optimum loan repayment tenure basis your repayment capacity.
Choose to make a higher down payment amount.
As RBI permits the lenders to fund up to 90% of the value of the property as a home loan, borrowers require arranging the remaining amount as a down payment from their own resources. While many of the Kotak Mahindra Bank home loan borrowers or other home loan borrowers generally try contributing a minimum down payment amount, choosing a higher down payment is considered to be a better option. Higher down payment results in reduced loan need, which further leads to lower interest costs and EMIs. As opting for a higher down payment reduces the lender's risk of lending, it even enhances your applicant’s approval chances. However, the higher down payment must not be performed at the cost of one’s contingency fund or investments meant to achieve important long term financial goals. It is because doing this might result in availing of expensive loans for funding your financial goals or meeting financial emergencies.
Make sure to compare loan offers among multiple lenders.
You must always make sure to strike a comparison amongst numerous credit options based on processing charges, interest rates etc., before you finalize your lender. Interest rates and numerous other linked expenses differ across numerous lenders based on their credit risk examination of loan applicants. For example, many of the home loan lenders provide home loans at lower rates and charges to those with a strong credit score of 750 and above. Also, many of the lenders even price their rates based on their job or employer profile.
One of the prudent ways to strike comparison among rates and other features is to approach online lending markets. Such markets facilitate the right home loan comparison provided by lenders based on your credit score, monthly income, job profile and other crucial eligibility criteria.
