How to get the cheapest home loan

Almost every borrower devotes their efforts trying to find the cheapest home loan. After all, who wants to spend more than they have to on a housing finance? However, in their pursuit to cut costs, many borrowers find themselves tethered to inferior finance solutions. Keeping this in mind, the following article will go over some time tips to reduce the cost of home loans in India, without compromising on the quality of the loan on offer.

1. Opt for floating rates.

Floating home loan interest rates are lower than fixed rates. This is because they are very unpredictable and come with the risk of increasing during the tenure of the loan. However, most housing loan experts believe the rates will fall in the future. This can be backed up by the fact that the RBI recently slashed its REPO rate twice in the last few months. If you borrow a home loan with floating rates, you should be able to get lower rates in the future.

2. Add a woman co-borrower to your application.

This is one of the simplest ways to reduce the cost of your housing loan. Wondering how? Well, women get rates that are a tad bit lower than the rest of us. That’s right! Their home loan interest rates are 0.05% lower than the rates for men. However, this benefit can be enjoyed by men too! All you have to do is add a female co-borrower to your home loan application. It could be your spouse, your mum, your little or bigger sister, and even your daughter.

Women co-borrowers can also help you get significant savings on Stamp Duty as well. This is because certain states in India offer concessional Stamp Duty to women owners. In some states, you can get as much as 2% off on Stamp Duty with a woman co-borrower; this can amount to lakhs in savings!

3. Make use of tax benefits.
This does not directly help you reduce the cost of a housing loan but it serves the same end objective – saving money!

You can use the interest and the principal amount paid in the year to claim an equal amount of deductions on your taxable income. On one side, the interest paid can help you deflate your taxable income by Rs. 2, 00,000 whereas the principal amount will help you reduce the same by as much Rs. 1, 50,000.

Together, they ensure your taxable income is Rs. 3, 50,000 lower than it is, amounting to huge tax savings every year. This benefit can also be availed by all joint applicants, as long as they are joint owners of the property as well!

4. Make prepayments.

Prepayments do not reduce the cost of the loan upfront. However, if you start making prepayments, it can help meet your objective to get the cheapest home loan. This is because, when you make prepayments, you directly reduce the outstanding loan amount. And, interest calculated on a smaller amount will result in lower EMIs and better savings.

These tips should help you save money on home loans in India. We hope the information will be helpful for you, good luck and all the best!

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