5 Ways to deal with high rates of Home Loan

There is always constant speculation for interest rates in the market, as will rise further, will remain constant or will fall. If the interest rate increases, then it makes tough for many households to cop up with it and many people find tough to manage their budget. In this case, one should follow the following ways to get rid of from high interest rate.

1.      Converting loans interest rate from floating rate to fixed rate

Those people who fear that the current floating rate of interest will rise in the near future and will exceed the fixed interest rate should try to convert their home loan rates from floating interest rate into fixed interest rate. Though, banks also revise the fixed rate of interest but after a certain period mainly after 3 years. One should opt for this only after; one understands its term and conditions and any charges applicable upon converting the home loan interest rate.

2.      Switching from one bank to another bank which provides better rate

In this case, one can also switch from one bank to another bank which provides better interest rate. One should check that the transfer of balance just benefit him. It means that charges levied on balance transfer are not so high that it out weighs his existing home loan. Therefore, one should check the loan tenure, amount of EMI and charges on transfer of balance.

3.      Try to get a loan for long duration

The person should try that his loan tenure increases, as it will decrease his monthly EMI amount. In this age factor plays the vital role, as banks will only increase the loan tenure if the borrower is not near to retirement age. For salaried person, the retirement age is 60 and for self employed it is 65 Yrs.

4.      Prepayment of the home loan

One should try to do apart payment of his loan, as it will reduce his loan burden and tenure. Most of the banks provide this option, subject to its terms. For the part repayment of the loan, one should do by his savings or investments but not taking another loan or by overdraft. Though, it will decrease the home loan burden, but on the other side, it is adding another loan liability on your financial budget.

5.      Try to minimize unnecessary expenditures

One should manage his funds by doing monthly budget. It not only helps the customer in reducing his unnecessary expenditures but also in increasing his savings. From it, one can do apart payment of his loan, which will not only reduce his loan burden but also will reduce the EMI amount.

The rates of home loan follow a cycle that it may continue rise or fall, totally depends upon the market force. The rates of home loan will increase or decrease; it totally depends upon the time.