Smart Ways to Manage your Home Loan
Moving into one’s own house is a feeling of great joy and more than this the home loan is one of the biggest financial commitments. While you cannot expect a high margin of error while repaying your home loan amount, still you need to follow certain ways to make sure that you can manage your home loan efficiently.
- Paying higher EMI, if possible
It is one of the finest ways to ensure that you are able to repay your loan sum before the tenure of home loan ends. If you are able to pay a slightly higher EMI like INR 25,000 instead of INR 22,000, then it can make a significant number of months or years to the loan period. For this reason, it is even essential for the home loan investor to invest money to generate enough funds and enhance equity to increase the sum of EMI.
- Manage Outflow and Inflow of Funds
The main objective while maintaining investments and loans is to maximize the overall cash flows. You need to compare your monthly expenditure (funds outflow) with the monthly income (funds inflow) on investments. For example, if you realize that there are few investments that are not able to yield adequate returns or have become fruitless, then it is ideal to close them and use such funds to pay your home loan EMI. Also, look for investments that offer higher ROI so that you can generate more income and this can be used to repay your loan.
- Opt for partial Pre-payment
The more time you would take to pre-pay the loan sum, the more interest rate you would be charged. It is, therefore, wise to check for the remaining home loan through a home loan EMI calculator and to opt for partial pre-payment to reduce the loan obligation. It is a beneficial way, and you can make such payments through income from a property, matured fixed deposits, rental income, gifts from family or parents and gains on stocks and shares.
- Shift to a bank charging lower interest rate
The lenders might lower their lending rates at distinct time intervals because of diversified interest rate settings. You can save on your home loan rate of interest by selecting the banks that have lower interest rates. It can be achieved through Balance Transfer Schemes. Also, you can transfer the entire or major principal of thehome loan to another bank with lower interest rate. But make sure that you don’t make the switch too often,or for small interest rate differential as each time you shift to another bank, you need to go through the entire underwriting, loan appraisal processes, technical, and legal paperwork.
- Use Home Loan EMI Calculator
The home loan calculators can assist you get an idea about the amount of home loan you can avail. These are user-friendly tools that are simple to function and can offer you with complete knowledge about monthly home loan payments, interest rate, and cash down payments. With these calculators, you can even identify the loan product or scheme, which is best for you. It also helps you to measure the amount of money that you require to save for the expenses and use as investments other than the monthly loan payments, like daily expenditures.
- Don’t Miss Making Monthly Payments
If you skip your monthly installments, then you will not just pull out the abundant cash from the fixed budget, but will also affect your total credit score. Make sure that your loan amount never categorizes as the Special Mentioned Account or SMA. It is because the banks consider such accounts a liability or the payment that remains outstanding for a month to 90 days after the date of due payment.
While you adopt any of these smart ways, you need to be clear of your ultimate goal that whether you require more money, you intend to reduce EMI or you want to diminish the interest rate or close the loan amount faster.The other important variables you need to consider are to keep into consideration the total home loan interest rate. Also, estimate the total cost of buying a housekeeping in consideration the cost of mortgage registration.
Once you are able to repay the entire sum of the home loan, only then you can consider yourself as the real owner of the house. So, try closing the loan as soon as possible as it would not just relieve the mental pressure of carrying debt, but also release more money in the family.
