Now that you have obtained a home loan for the house of your dreams, let us see some tips which may help you to manage your home loan.
1] Finding a reasonable interest rate and keeping high EMI amounts
Home loans can come with different interest rates totally depending on the lending party. Doing your homework on this front can be helpful.
You can negotiate your interest rate with your existing lender or transfer your existing home loan to another lender through the home loan balance transfer facility if you get a lesser rate there. Besides, keeping the EMI high can ensure a shorter loan repayment period and the rate of interest is usually less in this regard.
The less time you take to repay the EMI, the easier it is for you to be debt-free faster. Analyze your finances before going for this option as there can be other expenses as well which might interfere and turn it into a liability.
2] EMI calculator and refusal of deferred EMI payments
One can estimate the home loan installments they need to pay per month by calculating the amount through the EMI calculator that takes factors like earnings, expenses and other expenditure into consideration before providing you with results.
It provides an idea of the amount to be paid in installments / EMI, the rate of interest and the cash down payment to be paid with regards to the home loan. One can take steps accordingly to choose the amount to be paid.
Do not defer EMI payments even by a single instance as it can adversely affect your credit score. Try to be financially disciplined until your home loan repayment and cushion your bank balance with a few months’ worth of EMI amount.
3] Maintain a healthy credit score by managing your finances wisely
One can maintain a good credit score only by managing their wealth wisely. Also, a good credit score can help a person to score a better deal at getting a lower rate of interest when the banks process the request to provide a home loan.
At a reasonable cost, one can get their credit score checked with bureaus like CIBIL. Besides, it can help one to improve their finances as well.
4] Go for partial prepayment or foreclosure
Do not waste that office bonus or that incentive for your personal use when you have a home loan to repay! Use it to prepay either partially or completely before it’s due.
It will ensure that you become free of debt before you had expected and can reduce the interest considerably. Look into the prepayment charges before you go for this step.
You can look towards investing your savings / surplus cash into market instruments like stocks, bonds and funds (equity, debt or a hybrid mix of both). This should ideally be done in partnership with a market / investment advisor who can help you get a rate of return which is more than that of your EMIs.
Without careful valuation of the various marketing instruments and fluctuations, you may end up losing money than cover your EMI.
It is advisable that you thoroughly review the risks associated with each of the above options taking into account your needs, goals and requirements.
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