7 Proven Methods to Reduce Your EMI Amount

Your EMI is one of the largest recurring expenses. Reducing it can significantly improve your monthly budget and financial health. Here are 7 proven methods.

1. Increase Your Down Payment

The most direct way to reduce EMI is to increase your down payment. A higher down payment reduces the loan amount, which directly reduces your EMI.

Example: For a ₹20,00,000 property:

• With 20% down payment: Loan = ₹16,00,000
• With 30% down payment: Loan = ₹14,00,000
• This reduces your EMI by ₹12,500 approximately

2. Choose a Longer Tenure

Extending the loan tenure spreads your payments over more months, reducing monthly EMI. However, this increases total interest paid.

3. Refinance Your Loan

If interest rates drop or your credit score improves, refinancing at a lower rate can reduce your EMI significantly.

4. Make Prepayments

Paying extra towards your principal reduces the outstanding balance, which lowers future EMIs or shortens the loan tenure.

5. Improve Your Credit Score

A better credit score helps you get better interest rates when applying for new loans or refinancing.

6. Compare Lender Offers

Different banks offer different interest rates. Shopping around and comparing offers can save you significant amounts.

7. Consider Home Loan Balance Transfer

If your current lender offers a higher rate, transferring your loan to another bank can reduce your EMI.

The Trade-off

Remember that reducing monthly EMI often means paying more total interest. Calculate the long-term impact before making decisions.