Buying a house there has become extremely convenient with home loan interest rates in India becoming more affordable for the middle class. However, even if you have availed of an easy home loan, managing repayments so they do not burden your pocket is challenging. Here are some ways to better manage your home loan payments and have considerable savings at the end of your loan.
Home loans are usually the longest-running loans for most people because of the sizeable principal sum. However, most borrowers can extend or shorten their housing loan tenure by a few years.
Choosing a shorter repayment period might be a wise option if you want to save on home loan interest payments. Go to your lender’s website and use a home loan EMI calculator to check how much you will save on interest if you reduce the repayment tenure. If the savings are considerable and you can afford higher EMIs, choose a shorter term.
Another option you have is to lengthen your loan repayment tenure. Doing this can reduce your EMIs and stabilize your cash flows. While this may mean paying more interest, you can always make prepayments to reduce the interest burden mid-loan. Before choosing this option, use a home loan calculator to check the EMI; you will pay with a shorter tenure.
- Manage Your Cash Flow
Whenever you apply for a home loan, you should be prepared to devote a portion of your monthly savings towards EMI payments. To make these payments more comfortable for yourself, you should look at ways to maximize your cash flow. If you have any investments that pay you bi-monthly, monthly, biennially, etc., utilizing those payments towards your loan repayment doesn’t hurt. The key to effective EMI management is maximizing cash flows by closing investments that produce little to no returns and investing in plans that deliver more.
- Make Prepayments
No matter how convenient your home loan interest rate is, it is always a burden, and the more you can reduce the interest paid, the better your loan will be for your pocket. Making lump-sum payments for your home loan online or offline will mean that you get rid of your debt quicker than initially planned. You can utilize gains from shares, stocks, bonds, insurance, or other investments to make huge prepayments once in a while toward your loan. Try to make prepayments towards the beginning of your loan tenure since the outstanding principal amount is usually high.
- Opt for Home Loan Balance Transfer
People often regret choosing a particular lender a few years into the loan because they find a better lender offering lower home loan interest rates and more convenient payment options. If you have also found a new lender opting to lower the cost of servicing your loan, do not hesitate to opt for a home loan balance transfer. Check your home loan eligibility with the new lender, use a home loan calculator to find out how much you will save on your EMIs, and note the additional costs of a balance transfer before choosing this option.
All the abovementioned ways will help you manage your home loan cost-effectively. Follow them to make your home loan easy on your pocket!
