Are You Worried About the EMIs? Follow This Guide to Manage Your Home Loan EMIs
In India, several financial organisations offer home loans to eligible borrowers, along with various facilities. Thus, availing financial assistance to develop or reconstruct a home is popularly considered as a viable alternative. Nonetheless, it is important to pay the monthly instalments or EMIs without fail after availing such a loan. With well-managed home loan repayments, individuals can meet other financial commitments efficiently and maintain a healthy CIBIL score. The rate of interest is one of the most crucial factors which determine the EMI amount. Higher interest rates keep the EMIs on the higher side. So, extensive and thorough research on available interest rates is necessary before applying for a loan. Nowadays, individuals can check for different lenders online to compare interest rates, various fees, etc. So, borrowers should opt for competitive interest rates to reduce the housing loan EMI amounts and pay it on time.
Following are some tips to manage home loan EMIs –
Keep the repayment tenor longer
The repayment tenor is another crucial deciding factor for EMIs which directly affects the instalment amounts. Payable monthly instalments are reduced if individuals opt for a longer tenor. Nonetheless, borrowers also need to understand that they end up paying more interest on the credit by availing a longer repayment tenor. Thus, individuals should try to maximize the EMI amount until they can pay it comfortably every month.
Make a considerable down payment
Individuals can contribute significantly for the down payment. Thus, to manage home loan EMIs, borrowers can pay a significant part of the property’s value which reduces the total loan amount required. This helps to keep the loan to value or LTV low, and they need to borrow a considerably less amount as a credit. This way, the home loan repayments can be reduced.
Calculate EMI before applying
Furthermore, individuals must assess the monthly payable amount before applying for a home loan to know how much home loan EMI they can afford. Here, the home loan repayments calculator comes handy. With the help of this efficient tool, borrowers can estimate the EMI by submitting the principal amount, interest rate, tenor. Also, depending on monthly income and expenditure, they can determine monthly.
Change the lender by refinancing the loan
As per the Reserve Bank of India, financial institutes fix their interest rate based on prevalent lending rates. A financial organisation can set various rates of interest at different reset dates or intervals. Hence, individuals who have already availed loans at higher interest rates can make their home loan repayments more affordable by opting for lenders who are offering the loan at reduced interest rates.
Negotiate with the current loan provider
Individuals having a high credit score can negotiate the home loan service norms with their preferred finance provider. This enables borrowers to avail lower interest rates that acquire affordable monthly payments.
Opt for pre-payment facility
Financial organisations provide home loan repayment options with partial or full pre-payment facilities. With prepayments, borrowers can reduce the entire loan outstanding amount that eventually reduces the payable interest and thereon, the EMIs. Therefore, borrowers should opt for complete or partial home loan pre-payments to manage EMIs effectively. Individuals should use the extra fund flow such as bonuses, investment returns, etc. to pre-pay home loan dues. Also, they need to know about home loan balance transfer to save money.
Prioritise the loan repayment
Lastly, individuals must prioritise loan repayments above other financial regimes. Regular and disciplined EMI payments can also increase borrowers’ market credibility. Contrarily, long-term default payments can also end up attaching the concerned property on account of lenders. So, individuals need to follow a home loan repayment schedule to manage and pay EMIs on time efficiently. Other than the above-stated tips, individuals can pay one extra yearly EMI to avail a seamless repayment process. So, with easy home loan repayments, borrowers can pay their EMIs without default and plan their finances further for part-prepayments.