Housing loans require borrowers to maintain a disciplined repayment track for a prolonged period. Due to improper management and substantial loan quantum, delinquency rates for home loans are on the rise. As per a Trans Union CIBIL report, delinquency rates increased by 13 basis points year-over-year in January 2020.
To prevent defaulting on repayments, one must manage his/her house loan EMI effectively. Individuals can follow several methods to ensure that monthly installments do not overburden their finances.
Managing Home Loan Monthly Instalments
There are several financial institutions offering home loans in India. Nevertheless, every offer comes with varying terms and interest rates associated with it. A borrower should check the market in search of the most suitable housing credit.
Look for home loan interest rates that you can afford to pay. High rates can lead to immense financial strain during repayment.
While comparing the various offers, an individual should utilize a home loan installment calculator. Such a calculator can determine exact liability for borrowers against their loan amount, interest rate, and tenor.
Rather than manually calculating monthly liabilities for each loan manually, these house loan EMI calculators offer a faster and error-free way to undertake such calculations.
Paying the house loan EMI should be your top priority. Keep in mind that you must stick to the repayment schedule without fail to maintain your credit score. Additionally, late payments can also incur additional penalties, which can be difficult to bear alongside the sizable installments.
Defaulting on home loan payments can also hamper your credibility with your lending institution. Thus, repaying such loans on time should be prioritized.
Home loans are long-term credits, with tenor ranging between 15 and 20 years in most cases. Thus, a borrower’s income is likely to increase substantially within this period. With greater earnings, one can easily afford to pay higher sums as home loan monthly installments.
Thus, when you come into a substantial sum of money, use it to prepay a portion of your outstanding housing credit. Doing so will reduce your monthly installments/tenor immediately, ensuring easier repayment of the said loan. Still, one must keep a few factors in mind when prepaying home loans to maximize its benefits.
Home loans allow you to opt for hassle-free balance transfers. With it, one can shift his/her existing debt to a different lender, charging lower rates. Opting for such a transfer at the perfect time can lead to considerable EMI reductions, simplifying repayments.
Home loan borrowers can implement a practice through which they pay 13 EMIs in a year instead of 12. While this may seem like an unnecessary pursuit at first, its effects would become relevant around 10 years into the loan repayment tenor.
Following this method decreases the outstanding principal sum, which, in turn, reduces EMI payable drastically.
Besides that, if you are planning to take a brand new home loan, detailed market analysis is needed to determine certain features such as easy loan EMI payment. For example, using the Bajaj EMI Online Payment system, you will get a simple way to pay EMIs.
Managing house loan EMI can be simple if one is disciplined regarding payment. Responsibility in clearing such long-term debt starts right from lender selection. Additionally, prioritizing repayment over all else should also help you manage monthly installments.
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