How To Save Money on Your Home Loan in 2025?

Here’s how you can save money on your home loan in 2025:

1. Choose the Right Loan Type

When it comes to home loans, there are various options available. Understanding the different types of loans can help you choose the best one for your needs.

• Fixed-Rate Home Loans: Your interest rate remains constant throughout the loan tenure. This provides stability in your monthly payments, which can help you plan better for the future.
• Variable-Rate Home Loans: In this, interest rate can fluctuate based on market conditions. While they can be cheaper in the short term, they can also increase over time. Make sure you understand the risk if you go for this option.
• Hybrid Loans: It is a mix of both fixed and variable rates. These loans can give you flexibility while also ensuring some stability.

2. Opt for a Shorter Loan Tenure

Longer loan tenures can lower your monthly EMI. But, they can cost you more in the long run due to higher interest payments. A shorter tenure might mean higher EMIs, but you’ll save on total interest paid. For instance, choosing a 15-year tenure over a 30-year tenure can save you a few lakhs in interest, in interest, even though the monthly payments will be on a higher side.

3. Make a Bigger Down Payment

The larger your down payment, the less you need to borrow. A bigger upfront payment means a smaller loan. This helps reduce the interest you’ll pay. For example, if you’re buying a house worth ₹50 lakh, putting down ₹10 lakh instead of ₹5 lakh lowers your loan amount. This can save you thousands of rupees in interest over time.

4. Improve Your Credit Score

Lenders typically offer lower interest rates to borrowers with good credit scores. If your score is on the lower side, take steps to improve it before applying for a home loan. Pay off existing debts and clear any overdue payments. A higher score can make a significant difference in the interest rate you’re offered.

5. Compare Lenders and Shop Around for the Best Rates

Don’t just settle for the first loan offer you get. Interest rates and terms can vary widely between lenders. Ensure to compare loan offers from different banks, NBFCs, and other financial institutions. Use online tools like Saral to check the latest interest rates and read reviews to help you choose the right lender.

6. Consider Loan Refinance

If you’ve already taken a home loan and noticed lower interest rates in the market, refinancing can help. By moving your loan to a lender with better rates, you can reduce your monthly payments or pay off the loan faster. This will save you money on interest. However, be sure to factor in any refinancing costs to ensure it’s worth it.

7. Take Advantage of Government Schemes

In India, the government offers schemes to support home buyers, especially first-time buyers. One such scheme is the Pradhan Mantri Awas Yojana (PMAY). It offers subsidies on home loan interest rates for eligible buyers. Saral can help you explore more such schemes for potential savings. They can help you save a lot of money over the life of your home loan.

8. Watch Out for Hidden Fees

Some home loan agreements may have hidden fees such as processing fees, prepayment penalties, and others. These can add up over time, so it’s important to understand the loan terms. Always read the fine print carefully. If something is unclear, ask your lender about any fees or charges that might not be obvious.

Example: How Small Adjustments Can Lead to Big Savings Let’s say you take a ₹30 lakh home loan for 20 years with an interest rate of 8%. Your EMI would be around ₹25,200. But if you refinance to a rate of 7.5%, your EMI would drop to ₹24,200, saving you ₹1,000 every month. Over a year, that’s a saving of ₹12,000. While this may not seem like a huge amount, over the full 20-year term, this can add up to significant savings.

Conclusion

Saving money on your home loan in 2025 requires careful planning and smart decisions. From choosing the right loan type to refinancing and negotiating with your lender, every step can help you save. Remember, buying a home is a long-term commitment. And, every effort you make to reduce your loan burden can lead to financial freedom sooner than you think.

By making informed decisions, you can save money and build a solid foundation for your future. If you’re looking to find the best home loan options in 2025, Saral Funding can help. We’ll guide you through your choices and help you find the loan that works best for you.