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Top Five Ways to Manage a Home Loan Burden

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  • How to Manage a Home Loan

A home loan is often the go-to solution for most when it comes to purchasing the house of their dreams. Relatively lower interest rates, long loan tenor, and lucrative pre-approved deals make it a favourable solution to finance any significant real estate purchase. However, when it comes to repaying a home loan, a borrower needs to be smart when it comes to the monthly outgo toward the loan. If not thoroughly planned, home loan instalments may result in stress on the monthly budget. If a borrower is planning to avail of a home loan or has availed of one, they can consider some of the simple tips mentioned below to reduce the home loan EMI burden.

How to Manage a Home Loan

Home loan borrowers are often heard complaining about loan tenors extended until their retirement, credit cards reaching sky-high amounts and harassment due to missed EMIs. Financial experts suggest that if it seems like a difficult task to repay loans, then the borrower must tweak their approach. Here are five ways to do so.

Add spouse as a co-borrower

The lowest home loan interest rates are reserved for female borrowers. It is common for male homebuyers to co-borrow with wives to avail of the lowest rate. This encourages women to seek housing loans because of the concessions on the interest rates, and the fuss-free eligibility criteria. 

  • Try sharing the EMI burden with a co-borrower

    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. In certain cases, female

    applicants or co-borrowers even enjoy stamp duty concessions for tax deduction per the IT Act, further reducing your payables.

    Leading housing finance companies (HFCs) help expedite the home loan application process by sharing customized pre-approved offers that mandate minimal documentation. The offers may be claimed on products, such as housing loans and loans against property. A borrower can check pre-approved offers by entering essential details like their name and contact information. Do note that the final terms and conditions offered to you is subject to your lender’s discretion.

  • Consider switching lenders

    If anytime during the loan tenor a borrower feels that the current home loan interest rate levied by the lending institution is costlier, they can consider a balance transfer. This means that by switching the outstanding principal 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. Thus, the EMI is also higher. 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 permit the borrower to tap into the advantages of calculating EMIs before availing of a loan.

  • Choose to make a higher down payment

    As a rule, a higher down payment indicates a reduced loan principal and lower monthly EMI expense. Besides, a borrower's home loan eligibility also shoots up if they apply for a home loan after having put down a hefty down payment. This assures your lender of your financial stability and lowers your perceived risk of defaulting.

  • Check if terms can be negotiated with the lender

    Lenders are always appreciative of responsible borrowing. So, if a borrower has made the previous repayment promptly and has a CIBIL score of 750 and above, they are more likely to receive offers for better deals with a lower home loan interest rate. If not, they can try, and negotiate service terms with the lender, provided they maintain a healthy rapport with the lender. Besides, the borrower also needs to keep an eye on ongoing special offers declared by lending institutions for existing customers.

  • Plan for a long tenor with part-prepayment

    A longer loan tenor is directly proportional to a lower EMI, albeit a higher total interest outgo to the lending institution. Before availing of long-term credit in any form, it is advisable that borrowers chalk out their liabilities and accordingly design a home loan repayment plan.

    Financial experts recommend borrowers to make part-prepayments based on their financial capacity every 3-4 years and readjust the loan tenor. This way, earlier EMI payments are expected to drop, and they can adjust the monthly outgo later based on the disposable income. An online home loan EMI calculator can help plan the repayment and help reduce the monetary stress.

The Final Words

As an aspiring homebuyer, a clever move would be to explore and make a comparison of housing 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 special market benefits without even stressing monthly finances.

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