How to Save Money on Your Home Loan Without Refinancing

Owning a home is a significant milestone for many, but managing a home loan can be a financial burden. While refinancing is a popular way to reduce interest costs, it’s not the only option. There are several strategies you can employ to save money on your home loan without going through the refinancing process. This guide will explore practical tips and insights to help you reduce your home loan expenses effectively.

Understand Your Current Loan Terms

The first step in saving money on your home loan is to thoroughly understand your current loan terms. Review your loan agreement to know the interest rate, loan tenure, and any prepayment penalties. This information will help you make informed decisions about managing your loan. Read A Beginner’s Guide to Filing Income Tax Returns

Fixed vs. Floating Interest Rates

Understanding the type of interest rate on your home loan is crucial. Fixed interest rates remain constant throughout the loan tenure, providing stability in your monthly payments. Floating interest rates, on the other hand, fluctuate with market trends, which can either increase or decrease your monthly payments. Read Fixed vs. Floating Interest Rates: Which One Should You Choose?.

Loan-to-Value Ratio

The loan-to-value (LTV) ratio indicates how much of the home's purchase price you are borrowing. A lower LTV ratio means you have a higher down payment, which can reduce your monthly payments and overall interest costs.

Strategies to Save Money on Your Home Loan

1. Make Extra Payments

One of the most effective ways to save on your home loan is to make extra payments whenever possible. By paying more than the required monthly installment, you reduce the principal amount faster, which in turn reduces the total interest paid over the loan tenure.

2. Optimize Your Repayment Schedule

If your loan allows, consider increasing the frequency of your payments. For example, instead of paying monthly, you could pay bi-weekly. This approach can reduce the interest accumulation and shorten the loan tenure.

3. Utilize Home Loan Subsidies

The Pradhan Mantri Awas Yojana (PMAY) offers interest subsidies for home loans, making homeownership more affordable. For example, under the Credit Linked Subsidy Scheme (CLSS), eligible borrowers can receive interest subsidies of up to 6.5% per annum, significantly reducing their loan costs. Read our Blog on Loan EMI Vs. Lump Sum Payments.

4. Maintain a Good Credit Score

A good credit score can help you negotiate better terms with your lender. Aim for a credit score of 750 or higher to enjoy lower interest rates and better loan terms.

5. Consider a Joint Home Loan

Applying for a joint home loan with a spouse or family member can increase your eligibility for a larger loan amount and potentially lower interest rates. This strategy can also provide financial stability and shared responsibility. Take a look at this blog: Loans Against Mutual Funds: A Strategic Financial Tool for Real Estate Investors

Current Trends and Insights

Interest Rates

As of April 2025, Axis Bank offers home loan interest rates starting at 8.75% per annum. These rates are subject to market conditions and individual eligibility. LIC Housing Finance offers competitive rates starting at 8.5% per annum for floating rate loans, making it an attractive option for borrowers.

Loan Amount and Tenure

Axis Bank provides home loans ranging from ₹3 lakh to ₹5 crore, with repayment tenures up to 30 years. LIC Housing Finance offers loans from ₹1 lakh to ₹15 crore, with tenures up to 30 years for salaried individuals and 25 years for self-employed applicants. Check this blog out: How to Maximize Interest Earnings on Your Savings Account

Conclusion

Saving money on your home loan is achievable through strategic planning and proactive management. By understanding your loan terms, making extra payments, utilizing subsidies, maintaining a good credit score, and considering a joint loan, you can significantly reduce your interest costs and shorten your loan tenure. Stay informed about market trends and interest rates to make the most of your home loan experience. For those in pursuit of their dream home, investment opportunities, or a sanctuary to call their own, Jugyah provides top housing solutions with its intelligent technology.

Frequently Asked Questions

Q1. What are the benefits of making extra payments on my home loan?

Making extra payments reduces the principal amount faster, which in turn reduces the total interest paid over the loan tenure. This strategy can help you pay off your loan quicker and save money.

Q2. How can I benefit from the PMAY subsidy?

Under the PMAY, eligible borrowers can receive interest subsidies of up to 6.5% per annum. This can significantly reduce your loan costs and make homeownership more affordable.

Q3. What is the current interest rate for home loans?

As of April 2025, Axis Bank offers home loan interest rates starting at 8.75% per annum. LIC Housing Finance offers rates starting at 8.5% per annum for floating rate loans.

Q4. How can I improve my credit score?

Maintain a good credit score by making timely payments, keeping your credit utilization low, and avoiding multiple loan applications. Aim for a score of 750 or higher to enjoy better loan terms.

Q5. What is the maximum loan amount I can borrow?

Axis Bank offers home loans ranging from ₹3 lakh to ₹5 crore. LIC Housing Finance provides loans from ₹1 lakh to ₹15 crore. The exact amount depends on your eligibility and the lender’s assessment.