How to Save Interest on Home Loan 

A dream home is a significant investment, and for most people, a home loan is a steppingstone to achieving this dream. However, while home loans facilitate homeownership, the interest associated with them can be a substantial financial burden over the years. But what if there was a way to reduce this interest? In this post, we’ll explore how to save on home loan interest.


Understanding Home Loans

At its core, a home loan is a sum of money borrowed from a bank or financial institution to purchase or construct a house. The borrower agrees to repay this amount in instalments, along with interest, over a fixed tenure.

The Importance of Saving Interest

Interest on home loans, over their typical tenure of 15-30 years, can add up to be as significant as the principal amount itself. Therefore, saving on interest can lead to substantial savings in the long run.

How Much Can You Save?

The actual savings depend on the loan amount, interest rate, and strategies you employ. By adhering to the tips outlined below, one could save anywhere between a few lakhs to several lakhs over the loan tenure.

Strategies to Minimize Home Loan Interest

1. Opt for a Hefty Down Payment

The rule is simple: the more you pay upfront, the lesser you borrow. By increasing your down payment, not only do you reduce the principal loan amount but subsequently, the interest payable on it.

2. Choose a Shorter Loan Tenure

While longer tenures result in smaller monthly instalments, they incur higher total interest. Opting for a shorter tenure might increase your EMI, but you’ll be debt-free sooner and with less interest paid.

3. Make Regular Prepayments

Direct any surplus income, like bonuses or tax refunds, towards prepaying your home loan. This reduces the principal amount and the overall interest.

4. Shop for the Best Interest Rates

All lenders aren’t equal. Interest rates vary, and a slight difference can have a large impact over the years. Regularly review the market, and consider refinancing if you find a better rate.

5. Consider Fixed-Rate Loans

A fixed-rate loan ensures the interest remains constant throughout the tenure. While they might start slightly higher than variable rates, they offer predictability, especially in an environment where rates are set to rise.

6. Leverage Government Schemes

Programs like the Pradhan Mantri Awas Yojana (PMAY) offer interest subsidies. If eligible, such schemes can significantly cut down your interest burden.


Purchasing a home is a momentous decision. By employing strategies to minimize the interest on your home loan, you not only save money but also fast-track your journey to being debt-free. With proper planning, the dream home won’t remain just a dream, but become a reality that doesn’t financially strain you.

Key Takeaways

  • Increasing your down payment can significantly reduce the amount of interest you pay.
  • A shorter loan tenure, while resulting in higher EMIs, can save you money in the long term.
  • Regularly prepaying your loan, even in small amounts, can make a big difference.
  • Stay updated with market rates and consider refinancing if beneficial.
  • Government schemes like PMAY can provide considerable interest relief.


1. How much should I put as a down payment to get the best interest rates?
While it varies, a down payment of 20% or more generally helps in getting favourable rates.

2. Can I switch to a fixed-rate loan from a floating rate in between?
Yes, most banks allow switching between fixed and floating rates, but there might be charges involved.

3. How does PMAY help in saving interest?
PMAY offers interest subsidies to eligible candidates, thereby reducing the effective interest on the loan.

Begin Your Home Loan Journey with Ruloans Today!

Are you ready to step into your dream home without the weighty financial burden? Start your home loan journey with Ruloans today and let us guide you to substantial savings. Click here to initiate your application.

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