Buying or building a home is everyone’s dream, but it also is a big responsibility involving a great deal of investment. It requires planning and commitment.
We save money for retirement, children’s education, a new home, or securing the future. Sometimes we fall short on finances and need a helping hand to fulfil these dreams.
For homes, at least, we have the support of a home loan. But home loans are long terms loans, hence, they must be planned carefully.
Mismanagement of loans can lead to debt burdens; that is why finding the right financial lender and loan product is the crucial first step.
People who need home loans must seek professional financial guidance from finance companies as they are the ones who can correctly guide you and provide the best possible home loans with minimal interest rates in India.
Home loan EMI calculators also help borrowers plan their finances, making it easier to forecast tenure and repay loans.
Financial institutions today are making the loan application and disbursement process a breeze. While getting a loan may have become more accessible, repayment can still be a task if not planned prudently. Here is a list of ways to plan your loan so that you can pay off the loan without any extra effort.
1. Make a higher Down payment amount
A down payment is the initial investment made when you decide to purchase a property. When you approach a lender for a home loan, the institution will determine how much down payment you are willing to pay?
Depending on the down payment percentage, the institution will calculate your loan requirement and the subsequent EMIs. Hence to reduce the burden of higher EMIs or longer tenures, it is advisable to pay the maximum down payment possible. It will enable you to apply for a lesser loan amount and ease your repayment terms.
2. Choose a short tenure of repayment
Selecting a shorter tenure for your home loan gives you the benefit of paying the loan faster. This way, you save on the interest rate as you reduce the loan duration.
Short tenure may mean a higher EMI, which may keep the borrower on his feet but accrues lesser interest in the long term. The shorter the tenure, the faster you will repay the loan. And when a loan is fully paid, it allows the homeowner the liquidity for future investments.
3. Find a lender with a lower rate of interest
We often find attractive advertisements that offer deals too good to be true; most come with conditions.
Often, hidden between the fine lines of reduced processing fees or other minimized costs comes the condition of a higher interest rate. A higher interest rate of even 0.05% can set your plan back by months of EMIs and put a debt burden on the investor.
To avoid such situations, it is highly advised to thoroughly check and choose a financial institution, such as PNB Housing, that offers transparency in processes and a lower interest rate.
4. Ensure to pay regular EMI’s
One of the many reasons loans get accumulated, and people find them difficult to repay is because EMI’s are not regularly paid on time. If you have too many things going on, it is best to keep a monthly reminder a couple of days in advance about your home loan EMI.
Delaying the EMI or missing the EMI for the month will invite a penalty, an added burden to the existing situation. Missing your EMIs makes you in defaulter and affects your credit score and credibility for future loans.
Hence, one of the ways to ensure a hassle-free closure of a loan is to pay it on time.
5. Clear the debt by paying higher EMI
Last but not least way for smooth repaying of home loans is to pay a higher EMI when possible. There are months when the expenses hit a low, or you receive a corpus in the form of a bonus or hike.
This extra money is best used to clear your debts. Pay it towards your principal amount to clear your loan faster. This move will reduce the tenure of your EMIs and the interest you pay as well.
The quicker you repay your loans, the far more stress-free you are likely to be. While some may look at home loans as a burden, remember there are tax benefits and the ease of repayment that allows you to realize your dream of owning a home.