7 Smart Tips to Manage EMIs of Your Home Loan Efficiently
If you have down payment readily available and you also meet eligibility criteria of the lender, getting Home Loan isn’t a difficult task. However, Home Loan is a long-term commitment and one of the biggest financial decisions one makes. Managing repayment of Home Loan in EMIs (equated monthly instalments) is something extremely crucial you have to think about beforehand so that you don’t fall into a debt trap.
If you want to know how you can manage your Home Loan EMIs efficiently, following tips can be helpful to you:
1. Do Research and Find a Cheap Interest Rate
Home Loans are available at varied rates of interest (based on the lenders’ policies and borrowers’ eligibility). It is ideal to do your research before buying Home Loan so that you can get a better deal. If you are repaying an existing Home Loan, you can consider Home Loan Balance Transfer facility that lets you transfer outstanding Home Loan amount to another lender at a lower interest rate. Hence, analyze various options thoroughly and choose an option which is more profitable for you.
2. Keep Your EMIs High
Higher EMIs means shorter loan tenure and lesser interest cost. It is ideal to get rid of your debt as soon as you can and higher EMI amount can help you achieve that. Keep your not-so-important expenses at bay so that you can afford to pay higher EMIs. Unnecessary expenses can be made later when your loan will be closed. Go for this option after analyzing your budget and affordability so that it doesn’t end up being a financial burden.
3. EMI Calculator is There to Help You
EMI calculator is an easy-to-use tool that provides you an estimate of the Home Loan instalments you can pay each month based on your income, expenses and other factors. This calculator gives you an accurate idea of EMI payments, interest rate as well as cash down payment for Home Loan. Based on your eligibility, you can choose a Home Loan scheme which is most feasible for you.
4. Always Keep Your Credit Score in a Good Condition
Having good credit score can help you get a better Home Loan deal at a lower interest rate as it is one of the most crucial factors that lenders consider for processing your Home Loan application. You can get your credit score from credit bureaus like CIBIL, Equifax, Experian and Highmark for a nominal fee. Knowing your credit score can help you think of necessary steps you have to take to improve it if it’s not in a better condition.
5. Say ‘No’ to Delay or Default in EMI Payments
Even a single delay or missed EMI payment can impact your credit score and you may have to pay penalty for it. Pay all your EMIs timely and maintain a strict financial discipline until the completion of your Home Loan. Also, make sure you have kept aside a few months’ EMIs amount as an emergency buffer.
6. Manage Your Finances
Home Loan repayment is a long commitment; you have to manage your finances well so that your EMIs can be paid regularly on time. Close some investments that do not provide enough returns (as compared to Home Loan interest) or divert them towards your loan EMI payments to clear your debt sooner.
7. Got a Surplus? Opt for Foreclosure or Partial Prepayment
If you have got surplus in the form of incentive, bonus, gift, etc. you can use it to prepay your Home Loan in part or full before its due date. Doing this can reduce your interest cost and help you get debt-free sooner. However, consider prepayment charges before opting for loan foreclosure or partial payment.
With a thorough planning, strict financial discipline and following the tips mentioned above, you can manage your Home Loan EMIs in an efficient way.
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