Home loans offer a great way to finance your new house, but managing and keeping up with repayment of your debt may prove to be a bit tedious. Most people start off by calculating the amount they need in order to take a loan and how much money they will need for EMI payments, but they often forget to calculate other expenses that may make this journey a bumpy ride.
You can calculate home loan emi to set a plan for yourself. However, it can be difficult to plan with regards to unexpected expenses that may arise in the near future. Managing your home loan takes a lot of creativity and planning. This article will give you some helpful tips on how you can manage your home loans well.
Pay a Larger EMI
If your life is running smoothly and you have no monetary problems, you should try to repay your home loan as quickly as possible. This will not only make your loan tenure shorter, but also decrease the interest rate on your loan.
Pay a Bigger Down Payment
If you have enough savings in your account this would be a good time to use it. Loans are based on the income not on savings, hence you could take a smaller amount of loan and make a bigger down payment with your savings. This would help you repay your loan in a faster way without having to pay too much in the form of interest.
Pay More When Possible
Whenever you can, try to pay more whenever possible. Instead of wasting your extra money and increasing your expenses, make use of salary hikes and annual bonuses to repay your home loan.
Wrap Up Other Loans
If you have other loans to take care of as well, then it’s always advisable to pay off your other loans as quickly as possible, since having too many loans to pay would cause a lot of stress and pressure.
Change the Lender
If you’re finding it hard to repay your home loan, you could approach your existing lender and ask for better loan terms. If your lender refuses, you have the option of changing your lender. In most cases, when you approach another lender he will try to give you loan terms that suits you better.
This can be done through ‘Balance Transfer Schemes’. Under the balance transfer scheme, your entire or major unpaid principal of the loan amount can be transferred to another bank, in order to avail lower interest rates. However, make sure that you do not try switching too often or for minor interest rates changes, since each time you make a switch, you have to go through the processes like underwriting, loan appraisal, and legal paperwork. Also, there will be a fee charged for switching to another lender.
Do Not Delay or Miss Your Monthly Payments
Missing out on your monthly payments will not only affect your credit score, but it will also take out the surplus cash you have from your fixed budget. Ensure that your loan EMIs never lag behind or get tagged as a Special Mentioned Account (SMA). If your payments remain outstanding for a period of 30-90 days after your due date then banks categorise the account as SMA. Thus, it is very crucial for you to always assess your loans and make sure to repay the existing ones before you take on a new loan.
These are some of the reasons why, home loans can sometimes be difficult to manage if you are not aware of everything that goes into it.