It is everybody’s dream to live in a house of their own. Buying property, however, can be expensive, especially in today’s world of high real estate costs. If you are unable to afford your dream house, you may want to consider taking a home loan to be able to buy a new house.

Here are some tips on how to save money on home loans-

Compare
Before signing any home loan agreement, research and compare different policies to find the one that suits you best. Read the offer document carefully and go through the terms and conditions well. Familiarize yourself with all the types of fees and payments that you would be required to pay before signing the home loan agreement. Also, understand if there is any kind of rebate or pre-payment fee advantage that you could enjoy for early or on-time payments of the EMIs.

Floating Rate Penalties
Taking up a home loan requires a good deal responsibility. If not repaid on time, home loans can create problems. Today, most banks offer home loans to their customers in order to help them buy the house of their choice when their own salary is inadequate. The Reserve Bank of India and the National Housing Bank has directed all other banks to waiver their floating rate penalties and charge the original interest rates. With the removal of penalties, you can save while you repay your home loan.

Prepayment of Loans
Make your payments on time and try to repay the full amount at the earliest possible. Since the penalties on prepayment of floating rate home loans have been abolished, it is best to prepay your EMI and save on the interest charges. If you lack the discipline to save up capital for prepayment, look for a bank which allows you to deposit small surplus amounts into your current account. This amount can be offset against the prepayment you make on your loan. You could even link the loan to your salary account in the bank and withdraw only the amount you need for basic necessities every month. In doing this, you will save a good amount of money, which can be used to pay off the loan.

Interest Rates
Before taking up your home loan, compare and contrast the different interest rates charged by different banks. Keep an eye out for fluctuations and out of the ordinary rise and fall in interest rates. If the interest rates fall drastically, consider refinancing. It would also be beneficial to recognize and evaluate how the interest rates change and affect your mode and method of payment (be in monthly, quarterly or annual)

Make the repayment of your home loan your number one priority. It would be advisable to forward all small bonuses and financial gains towards the repayment of your home loan. By following the methods listed above, you will surely save a lot of money that would otherwise be wasted behind a lot of hidden charges.