Smart Ways to Reduce Home Loan EMIs in COVID Crisis

With the current economic crisis-induced due to the COVID-19 pandemic, managing loan payments and other monthly expenses has become a daunting task for the common man. This is mainly due to salary cuts and layoffs happening across most of the industries. Fortunately, there are some ways to cut down your home loan EMIs during this pandemic season.

RBI had announced a total six months of moratorium on loan EMIs starting from 1 March 2020 to 31 August 2020 in an attempt to tackle the financial crisis. Moratorium period refers to the period of time during which you do not have to pay an EMI on the loan taken. It is also known as EMI holiday.

For the benefit of home loan buyers, we have identified a few smart ways by which you can reduce the monthly loan EMI burden. Let us discuss each in detail.

Choose a different lender offering lower interest rates

Refinancing your home loan at a lower interest rate is one of the simplest ways to save on EMI payments. So if you are wondering how to reduce your home loan EMI amount, consider changing your lender. It is possible that you might have taken the home loan many years ago and at that time the interest rates were on the higher side than it is now. Changing the loan lender is not a complicated process. Start looking for a new lender offering lower interest rates and you can easily get a home loan transfer from your existing lender. Experts also suggest that you choose a lender offering a Marginal Cost of Funds based Lending Rate (MCLR) as you can benefit from lower repo rates. You can use an EMI calculator to check the amount you will be paying at a reduced interest rate.

Make use of loan pre-payment facility

Given the pandemic scenario, most of the banks and Non-Banking Financial Companies (NBFCs) have waived off loan pre-payment charges enabling borrowers to pay a bulk amount of money to repay the loan in advance. The home loan overdraft facility which is linked to your bank account can be used to deposit any amount higher than the EMI. This will be used as a pre-payment towards the home loan thereby reducing the interest on the outstanding loan amount. You also have the flexibility to withdraw this extra amount later in case of any emergency and the outstanding loan amount will be adjusted accordingly.

Consider making a bigger down payment

Paying a higher down payment amount for your home loan will reduce both the interest and EMI amount. Make use of your savings and consider making a bigger down payment if you are availing a home loan. Moreover, the government has now relaxed the rules for withdrawal of funds from the Employee Provident Fund Organization (EPFO) account. In March 2020, the labour ministry had issued a notification allowing 60 million subscribers to withdraw up to 75% of their retirement savings or up to three month’s basic salary and dearness allowance (DA) from their Provident Fund account, whichever is lower. Making the most of all these facilities it is a wise decision to pay a higher down payment for your home loan.

Request for an extension of repayment tenure

Another alternative is to seek an extension of repayment tenure from your existing home loan lender. Although longer loan tenure means that you have to pay more interest, you can get a significant reduction in your monthly EMI amount. If nothing else works this is the best option you can consider. The approval for extension depends mostly on your age as usually the loan period is allowed only till your retirement age and not beyond that. However, you can approach your lender and submit a request.

As a borrower, if you are looking for ways to reduce your home loan EMI burden, follow the above-mentioned tips. With clever planning and some tactical moves, you can easily manage your home loan EMI during these testing times. If you are planning to take a new home loan, make sure that you choose a reliable lender offering lower interest rates. Also, you must review and understand the rules and eligibility criteria given by the lender before signing any documents. Being aware of the interest calculation, loan tenure, pre-payment options, refinancing and extension policies, etc will help you to make an informed decision.

We hope that this article was helpful to you. If you need any assistance regarding home loans or EMI payments, do not hesitate to speak to a financial expert or real estate advisor as they will be able to guide you further.


As the most trusted real estate brand in the nation, we at Confident Group strive to create a positive, smooth and transparent medium for potential home buyers with anything and everything related to home purchase. We provide informative and engaging articles which cover useful details across many verticals from the real estate sector. Our 2-decade long expertise in building infrastructure projects across Kerala and abroad backed by the trust of over 10,000 customers earned us the reputation of being the best as a real estate brand in Asia. We hope that our blogs will help in translating our experience for the prospective buyers who are looking for their dream home.

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