6 things you can do to ensure a smoother home loan experience.

Taking a home loan is a true test of your financial capacity. Even with ample amounts of research & planning, repaying one can become a daunting and demanding task. However, you can use the 6 tips mentioned in this article to ensure you borrowing experience is a smoother and easier one.

1. Save for a bigger down payment.

If you have time on your side and you do not have to take a housing loan immediately, it makes sense to save as much as you can for a down payment. The bigger your down payment, the smaller the debt you have to endure. Smaller loan amounts also mean quick approvals and smaller EMIs

2. Work on your credit score.

If you are going to save up for a higher down payment amount, you should work on your credit score at the same time too. A higher credit rating will ensure hassle-free approvals, higher loan eligibility, and better interest rates; all of which should ease your borrowing experience.

3. Co-borrow a home loan with a woman.

Opting to borrow jointly with a woman, be it your mother, sister, daughter or wife, will make your life much, much easier. This is because women borrowers are provided with certain useful benefits that you can enjoy by co-applying with one.

Firstly, you will get lower rates as women borrowers are provided this benefit. So if you rate was 8.55%, applying with a woman co-borrower will get you reduced rates of just 8.50%. This 0.05% reduction will save you a little every month for 20 or 30 years, depending on your repayment tenure.

Further, you will also get discounts on stamp duty and registration fees. In states like Rajasthan, the stamp duty for men is 5% and only 4% for women. This one percent should help you save lakhs!

4. Opt for a floating rate of interest.

When you apply for your loan, you will be presented with a choice of interest rates. You could choose between fixed, floating and semi-fixed rates. Usually, floating rates are much lower than fixed and semi-fixed rates. However, you should opt for floating rates only if you are young as these rates can increase and you will be able to handle them only with an increasing salary.

5. Make prepayments whenever possible.

During the course of your repayment, if you receive bonuses or appraisals, you should use them to prepay your home loan. When you make prepayments, you cut the principal amount and this result in shorter tenures and lower EMIs payable.

6. Use the tax benefits of a home loan.

Housing loans open the doors to significant tax savings. Firstly, you are allowed to claim deductions up to Rs. 1.5 lakh against the principal amount paid every year. Further, you can also avail deductions up to Rs. 2, 00,000 against the total interest you pay in a year. These benefits are applicable to both you and your co-borrower should apply jointly.

These 6 tips should help you enjoy a smoother home loan process. Good luck and all the best!

Hi, I am Anurag Mishra working with Home Finance company as Home Loan adviser owing good knowledge of Home loan, Home Loans, Home Loan Balance Transfer, Mortgage Loan, Property Loan and Personal Loan so on.