- Paying your home loan EMI on time? You will have more than one benefit to count on!
- The benefits include a healthy credit score, attractive balance transfer & top-up home loan deals - Read this post to know more.
Home loan EMIs can be a significant amount to pay considering the prevailing property prices. You can reduce the EMI amount by enhancing the loan tenure to as long as 30 years. Even then, the home loan EMI can be quite an amount to pay. But many are paying the same on time by saying ‘No’ to unnecessary expenses and making good use of their income. They are getting rewarded too by banks and housing finance companies for their timely payment.
So, what exactly is the reward they get? If you are paying home loan EMIs, this question should interest you! Knowing the same will only make you aware of the benefits to cash in later. In this post, we will discuss the same. So, read on!
What Can You Get by Paying Home Loan EMIs on Time?
The timely payment of home loan EMIs will help you grab attractive balance transfer deals, top-up loan offers, besides boosting your credit score. Let’s read about all these.
Good Credit Score
Paying home loan EMIs on time could lead to a perfect credit score, which ranges from 300 to 900 based on the repayment track of individuals. A perfect score would be more than 750, and if the repayment track shows timely payments for long, this could be a reality for you! So, if you are paying the home loan EMI on time, your score could be like that. The score might take time to be around 750, so be patient and keep paying on time.
Attractive Balance Transfer Deals Could Come Your Way
As we spoke earlier that a timely payment leads to a good credit score over time. A good score would further translate into attractive balance transfer deals. If you are new to loan, you might not know about a balance transfer. Well, it’s a process by which you can transfer your existing home loan to another lender at a lower rate of interest.
Now, you have two options whether to continue with the same EMI or opt for a reduced EMI post the balance transfer. In either of the cases, you will save on interest payments. But the savings will increase further if you pay the same EMI. The tenure reduces by choosing the same EMI post the home loan balance transfer. The reduction in tenure reduces interest payment further. And it’s pretty needless to say that you can get rid of loan payments faster after knowing all that.
Home Loan Balance Transfer Rates That Exist Now
In case you took a home loan at a higher interest rate, you can reduce the effect of it by transferring your loan to another lender at a lower rate. The table below shows the best balance transfer interest rates.
|Lenders||Interest Rate (In Per Annum)|
|State Bank of India (SBI)||9.15% - 11.30%|
|HDFC Limited||8.50% - 9.40%|
|LIC Housing Finance||8.50% - 10.75%|
|PNB Housing Finance||8.50% - 11.95%|
|Bank of Baroda (BoB)||8.50% - 10.60%|
Can You Get a Lucrative Top-up Home Loan Deal?
Yes, it’s possible when you pay your home loan EMIs on time. A top-up home loan is an additional amount over the outstanding loan balance. So, whenever you require funds for marriage, travel, medical emergency or any other personal purposes, you can apply for a top-up on your home loan, instead of going for a full-fledged personal loan. A top-up home loan comes at a greater rate of interest than a home loan, but lower than a personal loan. Check out below the top-up home loan and personal loan interest rate of top banks. That will prove our point!
|Lenders||Top-up Home Loan Interest Rate (In Per Annum)||Personal Loan Interest Rate (In Per Annum)|
|SBI||7.50%-9.70%||11.00% - 14.00%|
|BoB||7.70%-8.85%||10.90% - 18.25%|
|ICICI Bank||6.90%-8.05%||10.75% - 19.00%|
|Axis Bank||8.75% - 9.15%||10.49% - 21.00%|
|HDFC Limited||8.30%-8.80%||10.75% - 14.50%|
Note – The personal loan interest rate shown against HDFC Limited is of HDFC Bank, the banking arm of the premier mortgage lender.
How Does the Top-up Home Loan Work?
Normally, the interest rate of a top-up home loan is more than that of a normal home loan. If that remains the case with you, both loans will work separately. Yes, you will have a separate home loan EMI and a top-up loan EMI.
But when the rate remains the same as it is in the case of Axis Bank, the top-up amount will add to the outstanding home loan balance. Subsequently, the lender will calculate the EMI at the normal home loan interest rate. So, the top-up amount will run for the time left for the normal home loan. In case the consolidated EMI becomes too much for you to pay on time, the lender can increase the tenure of both loans.
Other Exciting Credit Deals
Lenders offer attractive credits to customers who have a spotless loan payment record. So, don’t be surprised to bag top-selling credit cards by paying home loan EMIs for long. These cards could come with high credit limits, extensive rewards, impressive cashback offers, and much more. All these will only let you enjoy seamless online and offline shopping.