Home loan emi is one of the largest burdens on a borrower of a home loan. After paying your home loan emi, you are not left with any surplus funds to invest in other investment options. Power of compounding works in sync with your loan tenure. For a loan with higher loan tenure, your interest payment would also increase with the increase in tenure of your emi.
There are certain methods to reduce interest burden on your home loan. There are two ways to reduce your interest burden on your home loan. One is to reduce interest rates 
on your home loan. You can always approach another lender to refinance your home loan at lower rate of interest. Second method is to pay your principal amount at faster rate. If you pay your principal amount at faster rate then, there will be less amount on which interest can be charged and it will reduce your interest burden. You can take help of an online emi calculator to calculate impact of early payment on interest reduction.
Let us study following factors which can reduce your 
interest cost –
- Pay one more emi per year – You can additionally pay one more emi per year in addition to 12 emi that you have to pay per year on your home loan. You can pay this emi from your annual bonus or variable component of your salary. This additional payment will reduce interest burden on your loan in future.
- Increase EMI every year – You can increase your emi every year depending on increase in your net salary or income. By doing this, you can repay your loan amount in shorter duration of time.
- Doing both – You can adopt the practice of doing both activities like paying one more emi per year and increasing your monthly emi to take advantage of both activities in a combined manner.
- Refinance at lower rates – It is often seen that banks do not pass the benefits of reducing rate of interests to the borrowers. In this case, you can refinance your loan
from another lender. A one point reduction in your interest rates can lead to reduction of lakhs in your interest amount of the home loan.
These tips can be utilized in any other loan apart from home loan but, these tips are most advantageous in home loan as you can use the power of compounding to reduce your interest burden over a longer period of time. You can use any online emi calculator to calculate and analyze impact of these steps on interest component of your home loan amount.
