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5 Smart Reasons Why Millennials Prefer to Pay Home Loans on Time

Updated on: 14 Dec 2021 // 22 min read // Home Loans
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When it comes to financial aptitude, millennials are certainly much ahead of the previous generations. The financial assiduousness can be attributed to better financial awareness they possess. While availing a Home Loan to purchase a property is a necessity for millennials as well, but they certainly know how to maximize the benefits on offer.

How millennials make most of Home Loan benefits?

Millennials want convenience with comfort, and that is why they prefer to compare different options and Apply Home Loan Online as well as avail doorstep document collection facility while opting for a Home Loan. Besides, they are also masters in planning the loan prepayment. But there is one distinct quality that millennials exhibit and that being repaying credit on time.

If you also belong to the millennial generation and are also considering to apply for a Home Loan, you must learn about smart reasons why pay Home Loans on time:

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Credit Score: One of the major reasons that millennials pay Home Loans on time is to maintain a good credit history and an excellent credit score. When you pay your Home Loan EMIs on time, not only does it boost your CIBIL score, but also reflects your behaviour as a responsible borrower. Having a good Credit Score and a sound credit history opens up the doors of preapproved credit for you. Your credit score is the true reflection of your creditworthiness and is one of the chief parameters considered by financial institutions while offering any credit facilities to you. By maintaining a 750+ Credit Score at all times, you can avail of any loan or Credit Card as and when you want. Moreover, a good credit score allows you to avail of the benefits of low-interest rates on your future borrowings.

Top-Up Loan: Another smart reason why millennials pay Home Loan on time is a preapproved top-up offer. Many lenders offer Top-Up Loan to their customers who repay their Home Loan EMIs on time. While the Home Loan takes care of the payment to be made to the seller, there are still some expenses which the borrower must make from his/ her pocket. Margin money, processing charges, stamp duty, property registration charges, etc. add up to a significant sum of money. As your personal savings could be bottomed out during the home purchase process, any unexpected financial requirement can pose a big challenge. This is where the facility of a Home Loan Top-Up can come handy. High-value loans at competitive interest rates are very helpful in managing financial problems.

Balance transfer: Being consistent in Home Loan repayments makes you eligible for better deals on balance transfer from other lenders. Financial institutions are always open to customers who are financially responsible and repay their loans on time. For instance, if you transfer your ICICI Home Loan to HDFC Bank, your HDFC Home Loan eligibility will be based on your credit score and past repayment history with ICICI Bank. When you have been repaying your Home Loan EMIs regularly, it is a proof of you being a financially disciplined individual. As such, other lenders will offer you better interest rates and longer repayment tenor along with various other facilities when you opt for a Home Loan balance transfer. By transferring your loan to a new lender, you can save a significant sum on the interest cost.

To Reduce Debt Lability: One of the obvious and most important reasons as to why millennials prefer to pay Home Loan on time is to get rid of the liability as soon as possible. The repayment tenor for a Home Loan can go up to 30 years, and the quantum of loan can run into crores. Both these factors make Home Loans a significant financial liability which you will be serving for most of your working life. By paying the EMIs on time, you can avoid unnecessary delays and, in fact, pay off the loan as quickly as possible. Moreover, when you are repaying your Home Loan on time, many lenders offer you EMI waiver of up to 12 months. Thus you can not only pay-off your loan quickly but also save a substantial amount of money.

For instance, Axis Bank offers Fast Forward Home Loans, wherein, when you pay your Home Loan EMIs on time, 6 EMIs are waived off after 10 years and 6 EMIs are waived off after 15 years of disbursement.

Avoid penal charges: Another smart reason for payment of Home Loan EMIs on time is to avoid the stiff penal charges. EMI non-repayment not only reduces your credit score and makes you ineligible for a balance transfer or top-up but also results in the Home Loan lender levying stiff penalties, such as:

  • Late payment charges of up to 2% of EMI
  • Penal interest @ 24% per annum till you repay EMI
  • Cheque bounce charges of up to Rs 1000 levied by the lender
  • Cheque bounce charges levied by your banker

These are some of the charges that you have to bear from your own pocket. These charges can run into thousands of rupees, acting as a drain on your financials. Moreover, the pressure of making 2 EMI payments the next month leads to you facing mental as well as monetary stress. Thus, it is always advisable to pay the Home Loan EMIs on time to avoid such stiff penalties.

Therefore by paying the Home Loan on time, millennials not only exhibit their financial acumen but a foresight to enjoy a better lifestyle without hassles.

Also Read: A Borrower’s Guide: Home Loans Explained in 10 Easy Points

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