Top Five Ways to Manage Your Home Loan Burden resource-Banner_WC
Top Five Ways to Manage a Home Loan Burden_WC
What is a Home Loan?
A Home Loan is often the go-to solution when it comes to purchasing the house of your dreams. Competitive interest rates, flexible tenor, and lucrative pre-approved deals make it a favourable solution to finance all significant real estate purchase. However, when it comes to repaying a Home Loan, a borrower be cautious about the EMI outgo. If not planned for properly, your Home Loan instalments may strain your monthly budget. If a borrower is planning to avail a Home Loan or has availed of one, they can consider some of the simple tips mentioned below to reduce their Home Loan EMI burden.
How to Manage a Home Loan?
Home Loan borrowers often complain about lengthy repayment and the difficulties that come with it. On that end, we offer some suggestions to curtain your interest outflow and manage your Home Loan burden better. Here are five ways to do so:
Consider Applying with a Female Co-Applicant
It is common for male home buyers to co-borrow with their wives to avail of a relatively low interest rate. Such concessions also encourage aspiring female home buyers to seek Home Loans to complete their dream of owning a home.
Share the EMI Burden with Other Co-Borrowers
If a borrower feels that the monthly outgo of an EMI may strain their finances, they can consider availing of a joint housing loan to help elevate the loan burden. Apart from female spouses, one can even apply with a parent or other blood relatives. Some co-borrowers even enjoy stamp duty concessions for tax deduction per the IT Act, further reducing the payables.
Consider Switching Lenders
If anytime during the loan tenor a borrower feels that their current Home Loan interest rate is costlier, they can consider a Home Loan Balance Transfer. By switching the outstanding loan balance to another lending institution at a more affordable interest rate, a borrower can save a significant sum of money over the loan tenor.
Refinancing a Home Loan can be beneficial during the early stages when the Home Loan interest usually exceeds the principal amount. However, before making the switch, a borrower must thoroughly compare the Home Loan interest rates and calculate how the difference might affect their monthly EMIs. This will allow the borrower to benefit from calculating the EMIs before availing of a loan.
Additional Link: About NOC Letters
Make a Larger Down Payment
A bigger down payment means that you have to borrow lesser as the principal amount, reducing your monthly EMI expense. Besides, a borrower's Home Loan eligibility also enhances if they apply for a Home Loan after having put down a hefty down payment. This assures your lender of your financial stability and mitigates your perceived risk of defaulting.
Negotiate Loan Terms with the Lender
Lenders are always appreciative of responsible borrowing. So, if a borrower has made the previous repayment on time and has a CIBIL score of 750 or above, they are more likely to receive offers for better deals with a competitive home Loan interest rate. If not, they can try and negotiate loan terms with the lender. Borrower can also benefit from ongoing special offers declared by lending institutions for existing customers.
Plan for Flexible Repayment with Part-Prepayment
Before availing of a long-term credit in any form, it is advisable that borrowers chalk out their liabilities and design their loan repayment plan accordingly.
You can also consider making part-prepayments when you budget allows it, to bring down your total cost of borrowing. If you are an individual borrower with a floating interest rate Home Loan, you can do this without incurring additional charges.
An online Home Loan calculator can also help plan your repayment systematically.
The Final Words
As an aspiring homebuyer, a clever move would be to explore and make a comparison of Home Loan interest rates quoted by top lenders. Adequate and full-proof planning at the outset is likely to prevent borrowers from making a mistake, and they can leverage some benefits without even stressing monthly finances.
Additional Link: A Quick Guide to Securing a Better Interest on Home Loans
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