When you are going in for a home Loan, you are probably taking the biggest financial decision of your life. It is your biggest financial commitment. Home loan is the best way to fulfill your dream to own a home. While it makes things easier financially, as your savings or not used up, the problem comes when you have to pay equated monthly installments (EMIs). There will always be some kind of overheads and it won’t be easy to handle them.
Here we are going to tell you how to handle your home loan EMIs.
Pay a higher EMI whenever possible: One of the best ways to handle your EMI is to prepay it before the tenure gets over. By paying slightly a higher amount of EMI, you can reduce a significant number of months and years from your loan tenure.
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Handle your funds: The main motive while dealing with loans and investment should be to maximize the cash flow. You should compare your outflow and inflow of funds. If certain investments are not meeting your expectations, then close them down and direct the funds towards your EMI of your home loan. Also, go in for options which give a return of 12-15 percent. The additional interest can be used to pay your home loan interest.
Go for Partial Pre-Payment: The longer time you take to repay the loan amount, the more interest will be charged. One way is to go for partial pre-payment. It is a great way to lower the loan tenure and decrease your loan obligation. There are a number of benefits when you go in for partial prepayment. For starters, the best thing about pre-payment is that there is no charge or fee for it and the amount can be as low as Rs 10,000. There are several things which you can use for your partial pre-payment. From bonuses to big gains on stocks and shares and income from property sold, everything can be used for partial pre-payment.
Change your bank to the one which has lower interest rate: Lenders keep changing their lending rates at different time intervals which happen because of diversified interest rate periods. You can save on your home loan interest by opting a lender who has lower interest rates. This usually happens through a scheme which is known as Balance of Transfer scheme.
Under this scheme, a majority of the loan amount is transferred to another bank account which has a lower rate of interest. The only thing which you need to keep in mind is that you should opt for these transfers frequently. The reason being that you have to go through a loan appraisal and underwriting process apart from all the legal work all over again. This amounts to wastage of time.
Do not delay your monthly payments: Skipping your monthly payment not only puts a strain on your fixed budget, it will also affect your credit score negatively. Another thing which you need to keep in mind is that your loan shouldn’t be tagged under Special Mentioned Account (SMA). A bank will tag an account as an SMA account when the liability/payment remains outstanding for 30-90 days after the due payment date.
Keep these tips in mind when you are paying your EMIS of your home loan. These tips will help you to manage your home loan and it won’t be a burden for you.
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