4 Things You Must Do After A Home Loan Rate Cut

  Author: Naveen Kumar

A home loan rate cut is welcome news for all borrowers because it means that they have to pay lesser interest on their home loan.  So, what do you do when there is a cut in the interest rate for your home loan? We recommend that you take four steps. They will help you drive home the advantage you get from such a home loan rate cut.

Check home loan rates of other lenders Your home loan provider may have reduced the housing loan rate but has its competitors done more? Find out about those home loan providers who have cut their rates more.

Look for a refinance or balance transfer option This will not apply if the home loan rate cuts are small and sporadic. However, in a period of regular housing loan rate cuts, actively explore whether you can refinance your home loan by a balance transfer to another home loan provider. Of course, you need to enquire from a potential home loan provider whether your property is eligible for a home loan under any refinance or balance transfer option.

Maintain your EMI This will ensure that there is a higher principal repayment component in each EMI you pay and you can get rid of the loan quickly by reducing the remaining tenure of the home loan.

Opt for EMI reduction as a last resort Don’t reduce the EMI keeping the tenure same, unless you are facing home budget constraints. In case you get the EMI reduced, make it a point to increase it again once your income rises.

A rate cut is always a good piece of news, but like many home loan borrowers, you may be tempted to reduce your EMI. However, during such times, it pays to take steps to retire the home loan as early as you can.