3 Simple Steps for Effective Home Loan Management
Once you have acquired a Home Loan, the next step is the repayment process. Depending on the type of loan you have taken and also the amount loaned, repayments can take anywhere between 2 to 20 years. This puts emphasis on immediately finding a smart way to manage your Home Loan.
In this article, we’ll take you through some tips to manage your Home Loan that will help you breeze through the repayment process.
Tips to Manage your Home Loan and Repayment Process
Make Use of Partial Pre-Payment
For most people, loan repayment becomes a priority over other expenses since the longer you take to payback the loaned amount, the more interest you will be charged. One way to ensure that your interest payment is kept to a minimum is by making loan payments in large chunks. Whenever you receive a salary bonus, a monetary gift from your family, or gain some profits from your investments, it would be wise to use the extra funds to make a pre-payment on your Home Loan. While there is a fixed cycle for the repayment process, banks usually don’t object to voluntary, unscheduled payment from the borrower.
Making a partial pre-payment not only brings down your total outstanding debt, but also ensures that you are saved from shelling out additional money for interest payments.
Increase Your EMI
An Equated Monthly Instalment or EMI is the most common method of Home Loan repayment. Basically, EMIs are fixed payments made by the borrower to the loaner at a particular date each month. They are used to pay back the principal amount and the interest charged so as to finish the loan repayment over a specified period of time.
Managing Home Loan EMI’s easily can make all the difference between a relaxed loan repayment experience and a troubled one. To ensure that you complete the process quickly, try increasing the amount you are paying with each EMI. By doing so, you can cover more ground on the repayment process and also cut down on your interest payments. EMIs can be increased by making use of funds that are going into any endowment insurance plans you have taken, or by simply cutting down on your additional expenses and diverting that money into the EMI.
Shift to a Lower Interest Rate
Interest rates have a tendency to fluctuate and as borrower, you need to be aware of current percentages since switching to a bank that offers lower interest rates can help you cut down on additional interest payments.
Different banks reduce their rates at different times due to varied interest rate reset periods. So, looking out for banks that reduce their Home Loan interest rates in India at the earliest can be quite profitable for you. But make sure that you don’t make the switch too many times or for minor interest rate differences since each time you switch to a different bank, you will have to partake in the verification processes and legal paperwork all over again.
Another way to manage your Home Loan effectively is by opting for a financier that offers the flexibility to make the changes mentioned above. You can give the Home Loan services at Bajaj Finserv a shot for a smooth, economical experience.