5 tips to help you plan your home EMI effectively

A home is perhaps the biggest investment a lot of us would make. It is a dream come true for many and brings with it tremendous joy and a sense of accomplishment. It is only natural that a lot of planning and precaution go into buying a home and repaying the loan. An aspiring home buyer needs to plan every detail to the T for a pleasant experience borrowing and repaying the loan. Before we get started on planning home loan EMIs, let us first take a glance at how to best plan your finances before applying for a home loan.

  • Work on your debt to income ratio

Banks and other financial institutions take a close look at your debt to income ratio when you apply for a loan. The debt to income ratio is your monthly debt drawn against your salary to gauge your paying capacity. To reduce your debt to income ratio, it would be a good move to lower your credit card balance and space out your debts into low monthly payments.

  • Know about down-payment

Currently, all banks require you to make a 20% down payment for an 80% home loan. The best way to make your down payment would be savings, but it isn’t always a practical one.  You can make alternate arrangements like a gold loan or personal loan.

  • Be a good borrower

Your past behaviour as a borrower is looked at closely by banks when applying for a loan. Reflect on what your history looks like, and try to clarify any misunderstandings with bank officials.

  • Keep a healthy CIBIL score

A good CIBIL score comes with a lot of advantages like low interest rate, larger loan amount, longer repayment window, and faster loan approval process. For a good CIBIL score, it would be wise to clear out any existing loans before applying for a home loan.

 

Proper planning before applying for a home loan is necessary to make loan repayment a hassle-free experience. Here are 5 tips to help you plan your home EMI effectively:

  • Make your EMI the priority

When the repayment of your loan begins, make your home loan EMI the priority for the month. Schedule your EMI within the first week of every month so you make your payments soon after you receive your salary. Payment can negatively affect your CIBIL score, and prolonged default in loan payment can result in serious consequences. 

  • Make frequent lump sum payments

In the initial years of the loan repayment when the outstanding principal is high, do yourself a favour and make frequent lump sum payments. Whenever you receive a yearly bonus from work, an insurance policy matures, or you manage to save a little, direct your funds towards loan repayment. Prepayment can reduce your loan amount and reduce the loan tenure drastically.

  • Increase the EMI amount

Though a lower EMI over a longer period of time may seem doable, it is better if you opt for loan repayment plans of bigger EMIS over shorter periods. In some cases, loan borrowers end up paying nearly 60% of the loan amount in interest with longer loan durations. Speak to the loan officials and find your best option before opting for any loan repayment scheme.

  • Make one additional EMI payment every year

For people managing their home loan EMIs month-on-month, it can feel overwhelming to pay one month’s EMI additionally every year. Even a Rs. 5000 saving every month can contribute to the extra EMI for that year. Though it may seem difficult at the beginning, it is very much doable. There is usually no prepayment charge levied on floating rate term loans. The small prepayments can help save big when you look at it from a 10-12 year period.

  • Change your lender for better interest rates

If the bank your home loan is with is offering you their services at a higher interest rate, then consider switching to a lender who can offer competitive interest rates. Lenders and banks keep changing their interest rates periodically. If you find that you can make a favourable switch, then don’t hesitate to do so. You may need to invest a little time doing the paperwork and fees, the move can be beneficial for you in the long term. 

With a little planning, buying several properties can be very much a reality for you too. We hope our tips lead the way to a hassle-free loan repayment process for you.

ABOUT THE AUTHOR

As the most trusted real estate brand in the nation, we at Confident Group strive to create a positive, smooth and transparent medium for potential home buyers with anything and everything related to home purchase. We provide informative and engaging articles which cover useful details across many verticals from the real estate sector. Our 2-decade long expertise in building infrastructure projects across Kerala and abroad backed by the trust of over 10,000 customers earned us the reputation of being the best as a real estate brand in Asia. We hope that our blogs will help in translating our experience for the prospective buyers who are looking for their dream home.

Comments (0)

VIEW ALL COMMENTS

POST YOUR COMMENT

Your email address will not be published. Required fields are marked *

Subscribe to Realestate News

Quick Enquiry

Enquire Now

Realize Your Dream Home With
Confident Group









Disclaimer

Thank you for visiting our website. We would like to take this opportunity to keep you up-to-date with the changes currently being deployed in accordance with the rules and regulations stipulated by RERA – Real Estate Regulatory Authority.

This process may take time, and it’s duly advised not to take any information currently mentioned on the website like images, material, stock photography, projections, details, descriptions, etc. to make a final purchase decision. All information should be deemed to be or considered only as advertisements, solicitations, marketing, offer for sale, an invitation to offer, an invitation to acquire, including within the purview of RERA.

You are therefore requested to personally verify all the details and aspects of any booking/acquisition of units/premises, directly with our sales department. To reiterate, please do not rely on the information contained on this website to make a final purchase decision until all the revisions and updated are completed.

Also, please note that we’ll not be accepting any bookings or allotments based on the material, images and descriptions mentioned on the website. We request you to contact our sales department for expert advice and information on the same.

Thank you for your patience.

I Agree