Buying a home is a dream for everyone, irrespective of location, background, and other factors. Getting a Home Loan makes this process extremely straightforward since it takes care of the financial side. You can apply for a Home Loan easily as, over the years, banks and non-banking financial institutes have eased the regulations and procedures. However, before you apply for a Home Loan, you need to make a solid strategy to manage your loan well. There are different aspects to a loan; when you apply for one, you must be aware of these aspects.
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Manage your Home Loan like a Pro with These Tips
The EMI of your Home Loan is one of these aspects that you need to calculate beforehand. You can use a Home Loan EMI calculator to ascertain the monthly amount you need to pay for the Home Loan. We will discuss what you need to know about the Home Loan elements and a few tips to manage them well.
Handle Your Finances Well
Having good financial health is essential. You can only maintain good financial health and manage your loan well when you have control of your finances. You can take up a course on money management or start creating a budget.
Once you have a budget, try to stick to it.
Afterwards, make a few investments to control your money.
- Start investing in low-risk securities
Apart from investments, save some money that might come to use during emergencies. Ensure that you track all your expenses on food, rent or leisure.
And if you have a Home Loan, set some money aside for the EMI payments first.
Raise the EMI
The sooner you repay the loan, the better off you are. If you have some idle funds, increase your EMIs. While higher EMIs can scare you, you will realise the benefits of paying a larger sum during the earlier stages of prepayment. High EMIs bring down the loan cost as you will not have to pay interest for an extended period.
Using a Home Loan EMI calculator, find how much EMI you can afford in your current budget. If you are capable of paying a huge EMI amount, choose the same. Doing so will reduce your tenure and interest payment, making it easier for you to close the loan before the end of the tenure.
Make Part-Payments
While Home Loans have a single-digit interest rate, their tenures are so long that you will pay double the borrowed amount. Therefore, if you have some funds lying idle or have made a windfall gain, try to make part payments.
This lump-sum amount will reduce your principal balance and interest payments for that year. Part payments are a great option if you have an FD or an RD nearing maturity. Your target here should be to close your loan account as soon as possible.
Try Refinancing
Refinancing has now become a popular option among new-age borrowers and it is also called a balance transfer. It allows you to move your existing loan from one lender to another. Choose the one offering a better interest rate and the flexibility you need to make the loan payments.
Refinancing can significantly reduce the total amount you will have to repay. The Home Loan has a long term. And choosing the lender providing a Home Loan at a relatively cheap interest rate lowers your monthly payment.
Ensure that you calculate the internal rate of return before you opt for a balance transfer or refinancing, and go for it only if you have a substantial amount of loan left. With the help of a Home Loan EMI calculator, determine whether you should opt for a refinancing option or not.
Conclusion
Managing a Home Loan after it is granted can sometimes be tricky. You can follow the tips mentioned above to ensure that you make timely payments and have financial stability.