In today’s world, where real estate is booming, having the funds to purchase a house by yourself can be difficult. This is when the assistance from a Home Loan can be helpful. However, when you apply for such a Loan and secure the funding, you need to pay equated monthly instalments every month to your lender to repay the Loan amount. However, you need to manage your monthly EMIs efficiently. Here are the top ways to do so:
Pay your EMIs timely
Paying your EMIs on time each month can increase your creditworthiness. You could schedule the EMI close to the date your salary gets credited to ensure sufficient funds in your account. This also minimises the chances of defaulting on the payment due to a lack of funds. You can opt for an auto debit facility and skip the problem of missed EMI payments. Maintaining a clear repayment record for six to 12 months also helps you apply for a Home Loan Top-Up when needed.
This Top-Up Loan can be availed over and above your current Loan. Besides, you can utilise the funds for various purposes, including paying for your child’s education and emergency medical expenses.
Pay more
When you select a longer tenure to repay your Home Loan, you need to pay a lower EMI every month. However, you end up paying a higher amount as interest outgo. On the other hand, if you choose a higher EMI and a shorter tenure, you pay a lower sum as interest.
Take advantage of prepayments
If you get a bonus or proceeds from Insurance Policies, use it to prepay a part of your Home Loan. If you do this often, you can reduce the interest component of the Home Loan. It also helps you repay the principal amount of the Loan fasting, letting you close the Loan early.
Try a Home Loan balance transfer
Suppose you can lower the total cost of servicing a Home Loan by switching to a different bank that offers better interest rates. In such a case, you can carry out a Home Loan balance transfer and change to the new bank. Since interest rates play a crucial role in determining your Home Loan EMI, a lower rate reduces the EMI of your Loan. However, ensure you make an informed decision when carrying out a Home Loan balance transfer.
Pay an extra EMI
When paying your Rs. 1 crore Home Loan EMIs, try to pay an extra EMI every year. This might seem difficult. However, it is beneficial in the long run. This helps reduce the outstanding principal amount of your Home Loan. The effect of this step is crucial over a 10-year to 12-year period.
Conclusion
Now that you know these top ways, you can easily consider them when trying to manage your Home Loan EMI payments effectively.
No comments yet