Srishti Gosavi: A Finance Influencer's Guide to Reducing Home Loan EMIs

Srishti Gosavi is a renowned finance influencer known for her insightful tips and tricks aimed at helping individuals manage their finances more effectively. One of her key areas of focus is providing guidance on how to reduce Equated Monthly Installments (EMIs) on home loans. Through her experience and expertise, she offers a range of strategies that can significantly ease the financial burden of home loans.

1. Leverage Improved Credit Scores for Better Interest Rates

Srishti shares her personal experience of how she managed to negotiate a lower interest rate on her home loan. Initially, her credit score was around 600 points due to her recent adoption of a credit card. However, after a year of responsible credit card usage, her score improved to 728. Armed with this enhanced credit score, she approached her bank and successfully negotiated a 0.5% reduction in her loan's interest rate. This example underscores the importance of maintaining a good credit score and using it as a bargaining tool with lenders.

2. Utilize Conversion Fees to Lower Interest Rates

Another strategy Srishti recommends is paying a conversion fee to the bank, which typically ranges from 0.5% to 1% of the outstanding loan amount. This fee allows borrowers to reduce the interest rate of their existing home loans. By paying a modest conversion fee of Rs 2,500, Srishti was able to reduce her interest rate by almost 1%, resulting in significant savings over the loan's tenure.

3. Make Prepayments to Reduce EMIs

Srishti emphasizes the importance of prepaying home loans whenever possible. Prepaying the principal amount can substantially lower the interest burden, thereby reducing the EMIs. This approach not only helps in managing the loan more effectively but also accelerates the path to becoming debt-free.

4. Consider Refinancing for Better Terms

Refinancing a loan can be a wise decision, especially if the current lender's interest rates are high and inflexible. Srishti advises borrowers to seek new lenders that offer better terms, including lower interest rates and processing fees. However, she cautions that the processing fee for refinancing should not exceed 0.5% to ensure that the switch is financially beneficial.

5. Employ Systematic Withdrawal Plans for Regular Prepayments

Lastly, Srishti shares a unique hack she used during her loan tenure: employing a Systematic Withdrawal Plan (SWP) from her mutual fund investments. This strategy allowed her to make regular prepayments on her home loan, significantly reducing her EMIs. Additionally, the mutual funds continued to earn interest until they were withdrawn, providing a dual financial benefit.

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In conclusion, Srishti Gosavi's strategies for reducing home loan EMIs are practical and effective, offering valuable insights for anyone looking to manage their home loan more efficiently. By following her advice, borrowers can save money, reduce their debt burden, and achieve financial freedom more quickly.