Home Loan is one of the most opted loan facilities among customers. The reason behind it is everybody needs a roof over their heads. But soaring prices of real estate make the task of buying a home difficult for individuals. That’s why people decide to opt for a Home Loan from Banks, NBFCs or Housing Finance Companies at affordable interest rates. HDFC Bank is one of the leading private banks that provide Home loan facility to customers. Here, we will talk about one of the most important things — How HDFC Home Loan Interest Rates affect your repayment amount i.e. EMI?
You must be thinking why it is important to know the effect of rates? Well, home loans are generally taken for a long period, say 15-20 years. So, if an individual doesn’t keep this factor in mind, s/he may end up paying a huge sum as interest outgo and on EMI amount. HDFC Home Loan Interest Rates directly affect your repayment amount. The higher the interest rates, the higher will be your EMI amount and vice versa. That’s why it is always advised to choose a lower interest rate so that you don’t need to pay a huge sum of interest.
Since home loans are taken for a long period of time and it’s important to know some methods with which you can ensure maximum savings on your home loan. So, what are these methods? We are showing a few of those methods below. Please check!
Choose Shorter Tenure
As we said earlier that home loans are usually taken for a long period of time. One of the efficient methods to ensure savings is to choose a shorter tenure as it can reduce your EMI amount and overall interest outgo.
But by choosing a shorter tenure, your EMI amount will be higher as compared to a longer tenure, so you should choose the tenure according to your repayment capacity.
For this, you must see an example that will make you understand better. Let’s say an individual is going to take a home loan of INR 30 lakh at HDFC Home Loan interest rates of 7.75% per annum. We are taking two different tenures of 15 years and 20 years.
When you consider the tenure of 15 years, the EMI amount will be INR 28,238 and the interest outgo will be INR 20,82,889.
On the other hand, taking the tenure of 20 years, the EMI amount will be INR 24,628 and the interest outgo will be INR 29,10,830.
So, you can see that on choosing a shorter tenure, you can save around INR 8,27,941 in the interest outgo. But look closely and you’ll find out that you will be paying around INR 4,000 more per month on the EMI amount. So, choose the shorter tenure if your repayment capacity allows you to do so.
Paying a Higher Down Payment Amount
One of the other methods to maximum savings is to pay a higher down payment amount on your home loan. A higher down payment can also make your HDFC Home Loan Interest Rates lower. If you’re thinking what exactly the down payment amount is? Well, let me tell you that this is the amount that you need to fund from your own sources and ranges from 10% to 25% of your overall price property.
Let’s say you want to opt for a home loan of INR 40 lakh at lower HDFC Home Loan Interest Rates. For this amount, HDFC can only provide up to 80% of the overall price. So, you can only get INR 32 lakh as the loan amount. The remaining INR 8 lakh will be the down payment amount.
If you make a higher down payment amount, your loan amount will automatically reduce. Due to the lower loan amount, your HDFC Home Loan Interest Rates will also be lower as compared to when you are going for a higher loan amount.