Availing a home loan is the most preferred way to get funds for buying a new home. However, many people struggle with repaying the EMIs. The following tips will help you manage the loan efficiently.
Once your home loan is approved by the lender and the repayment begins, you must focus on efficiently managing your finances and repaying the EMIs diligently without missing a single payment. But, managing the EMIs is easier said than done, and many borrowers struggle with home loan repayment.
Managing the EMI payments requires prudent financial planning and a little bit of discipline with your spending. Here are a few tips that can help you:
- Make home loan repayment your priority
Repaying the home loan EMIs on time helps reduce the repayment burden and boosts your creditworthiness. To avoid missing the EMI payment on time, it is advisable to schedule the EMI close to your salary date so that you have sufficient funds in your bank account.
If you skip even a single EMI, it can attract a hefty penalty. And, it will impact your credit score adversely. So, to avoid penalties, it is advisable to repay on time and align your finances accordingly.
- Compare the home loan interest rate and choose the best offer
When you apply for a home loan online, it is advisable to compare the different insurers’ different plans in terms of interest rate offered. Today, with the growing competition among lenders, financial institutions offer home loans at a competitive interest rate and additional benefits to the borrowers.
So, conducting extensive research will surely help you find the best offer. Remember, the interest rate has a significant impact on the EMI amount. Lower the interest, lower the EMI, and it will be easier for you to manage the repayments.
- Partial prepayment
Home loan repayment requires a long-term commitment. But, what if you can pay off a part of the loan amount earlier than the actual tenure? This is where the partial prepayment comes in handy.
Prepayment is a facility offered by lenders that allows you to pay a part of the home loan principal amount and reduce the overall credit before the actual tenure. Suppose you are due to receive any lump sum amount in the form of maturity proceeds from your investment or annual bonus. In that case, you can use the amount to prepay the home loan.
One of the significant benefits of partial prepayment is that it reduces the EMI amount to the extent of the amount prepaid. Alternatively, you can pay the usual EMI and reduce the loan tenure.
- Use EMI Calculators
When you apply for a home loan online, you must use the EMI calculator offered by the lender to calculate the exact EMI payable on the loan you wish to avail of. Knowing the EMI beforehand will help you plan your finances well in advance and make necessary arrangements to repay the same without any hassles.
Additionally, knowing the EMI before approval will help you make an informed borrowing decision. If the EMI is high, you can either apply for a loan with a longer duration or reduce the amount. Either way, the tool helps you manage the repayment efficiently.
- Consider a home loan balance transfer
If you find that servicing the home loan repayment is too difficult, you can consider transferring your loan to another lender. This is called balance transfer of the home loan. The significant benefit of this move is that the new lender may offer a home loan at a lower interest rate, which means your EMI will be lower, and you can afford the same.
The home loan balance transfer process is quite simple. You must apply for a home loan with the new lender, comply with the paperwork and get the loan switched.
