Complications While Doing Part-Payment of your Home Loan
While a Home Loan is the easiest option you have to buy or build your dream home, the real challenge lies in repaying the loan. This might cause a significant hole in your monthly income for a long period. While the loan amount itself may be large, the added interest makes the amount payable even larger. A way to lessen your total interest payable and the loan tenure is part-payment of the loan.
Part-payment involves a significant fixed payment towards the principal amount of the loan. As the principal amount reduces, so will the interest amount. This seems like an easy solution to repaying your loan faster, but it does have its handicaps. Here, let us explore Home Loan part payment complications and ways to handle them effectively.
Things to Consider Before Making a Part Payment
Home Loan complications in India are the result of a considerable amount of red tape and excessive paperwork. These include rejection, low sanctioned amounts, high interest rates, and a large down payment.
Always consider the the best Home Loan rates available in the market and make your decision on that basis. You can apply online for a Home Loan today with Bajaj Finserv which provides extremely reasonable interest rates.
Complications of Part Payment
Some of the most common Home Loan part payment problems faced by borrowers in India are,
Limited Number of Part Payments
There is a restriction on the number of times that you can prepay in a year. This varies from one company to another.
Lock in Period
A lock-in period is a period of time when you are barred from prepaying your loan. Any payment before this period expires may lead to an extra charge. Bajaj Finserv, on the other hand, allows you to prepay your loan after clearing your first EMI.
Always remember that any promise from the lender or customer service has to be in writing. A verbal assurance may initially sound good but is worthless and unscrupulous bankers can cause you to lose your investment.
To effectively plan your finances it would be wise to calculate the amount you can pay.
Lower Tenure or Lower EMI
A lower EMI may lead to a higher interest amount in the long run. However, a lower tenure may lead to higher savings. This again is dependent on the lender and can be a complicated decision.
If you have paid the EMIs on time and are able to foreclose your loan before the completion of the tenure, make sure the part payments are such that you will end up with under a year of outstanding EMIs. Some lenders will levy extra charges for foreclosing your loan. Bajaj Finserv has nil foreclosure charges so you can close your Home Loan anytime.
In conclusion, part payments of your Home Loan come with their set of restrictions as well as benefits. Consider your financial position before you embark on this payment method to ensure it does not compromise your savings.