Building one’s own house is one of the dreams which a person desires to complete in his life. And getting a home loan is one of the first steps & most crucial steps of this lengthy process. Multiple banks are offering various schemes targeting different financial audiences.
Among all banks, SBI is offering home loans to its customers with the lowest interest rates in the entire country. Like every other bank, SBI offers multiple home loan schemes, differing based on financial & income category, and therefore have different interest rates, downpayment, time, and SBI Home loan EMI.
This article will talk explicitly regarding SBI home loan EMI & HDFC Home Loan EMI and how to save maximum on it.
After the down payment, customers can use EMI or “Equated Monthly Installment” as a loan repayment method. EMI helps divide the entire loan amount into small manageable amounts that a person can pay from his monthly income.
But EMI amount can fluctuate due to the ever-changing interest rates. This may create economic rifts in your life. Therefore it’s always advised to be aware of ways to save on your SBI Home Loan EMI.
Here are a few tips to save your money on SBI Home Loan EMI.
Choose a scheme according to your needs
SBI provides multiple schemes for various financial categories. It’s always advisable to choose a method which suits your needs and provides the lowest interest rate.
Prepayment of loan
Since the home loan repayment period is around 10 to 15 years, it’s highly likely that you may get a large amount of money in the form of a company bonus, performance bonus, or any other means. It’s always advisable to use that money for the prepayment of the loan. Even if it is a small amount, it is ideal to use the extra lump sum money you received to lessen the burden of the loan. This will reduce the total remaining amount to be paid, as well as reduce the upcoming EMI payments.
Never miss the EMI payment
Missing an EMI payment would strongly affect the loan repayment. If you miss an EMI payment, it will negatively affect the loan amount & EMIs. Also, the bank can legally charge an additional penalty in the form of late payment fees.
Do note that the bank would also charge interest on the missed EMI amount.
Switch to other Banks
During the long loan repayment period of around 5-15 years, you may find more suitable loan schemes from another bank. It’s always advised to move to a new bank if the interest of the bank of your interest is lower than your current bank. Low-interest rates help in reducing the period of repayment of the loan amount as well as opens the option of choosing to maintain a suitable EMI according to one’s financial conditions.
Do note that banks revise their interest rates from time to time. One should always take care of this fact while making this big decision. It’s highly possible that after you move to a new bank, that particular bank may increase its interest rate and the bank you transferred from lower down theirs. So choose wisely & smartly.
Extra EMI payments each year
Home loan repayment is a very lengthy procedure, usually of around a decade. One of the most efficient methods of reducing the long loan repayment period by a year or two is paying an extra EMI each year.
This reduces the overall financial burden. For this, you will have to control your expenses every month and save enough to pay for an extra EMI at the end of the year. In case you are stuck with a medical emergency or any other financial accident, you can consider a backup option as you would have already paid some EMIs.
Use an EMI calculator
We should be aware of how to use an EMI calculator. EMI Calculator is a fundamental calculation that uses parameters to calculate monthly EMI. The total loan amount, the rate of interest, and the time period is calculated. It is useful to calculate your SBI Home Loan EMI & HDFC Home Loan EMI.
The formula for EMI calculation is
EMI = [ P * R * (1 + R)^T ] / [ (1+R)^(T-1) ]
P, R, and T stand for the principal amount, rate of interest, and period of loan repayment, respectively.