A home loan is an investment towards a valuable and non-depreciating asset. It lets you fulfil the dream of owning a house of your own. Applicants for a home loan can experience a maximum tenure of 30 years to repay the loan amount. When you compare home loan details, you will notice that banks will try to shorten your duration of repayment or increase the interest rate on the borrowed amount.
Here is a list of what can be said is the best home loan advice ever, to help you clear your loan amount in an efficient way.
Consider pre-paying the loan
Pre-payment is often associated with a down payment of the loan amount, but here’s the difference. You can opt for pre-payment of the loan amount if you have surplus funds in your hands at the moment. It will help significantly reduce the EMI amount that you otherwise had to pay on a monthly basis. You can opt for two things here – reduce your EMI amount and keep the time period of repayment the same. Or, you can reduce the time period of repayment and pay the banks a larger EMI amount every month to waive off your loan faster. But remember to be careful while opting for the latter option. Make sure you increase your EMI amount only if you have a source of income that exceeds the salary you received when applying for the home loan.
Increase EMI amount with time
While you compare home loan rates, check out the banks that will let you increase your equated monthly instalment amount flexibly. This is an appropriate option if you are sure that you can keep up with the updated higher EMI. If you can increase your equated monthly instalments paid per month to a larger amount than what was agreed upon at the time of taking the loan, you will surely get benefitted from it since your tenure will reduce significantly and the repayment process will speed up.
Consider home loan tenure
This factor is somewhat synonymous with the previous factor but only because they are interrelated. As long as you have a fixed income and an appetite for low risk, you can stretch the time period or tenure of the loan to as much as 40 years. It is agreeably quite a long time, but you can save up on your finances while you keep an amount fixed to be deducted as home loan repayment. Make sure the bank you choose provides a low interest rate along with it too. If you have an outstanding CIBIL score, you will be able to benefit better from the bank with a lesser interest rate. On the other hand, as mentioned before, decreasing your time period means increasing the EMI amount. Only go for this if you have enough funds to repay it quickly, bearing in mind more an enormous expense to incur every month.
Never miss out on EMI
Sometimes, managing our funds becomes extremely stressful along with utility bills, household needs, family needs, or the like, especially in the case of a single applicant. Sometimes, not paying an EMI for a month seems like the easier way out until you can balance your finances and just repay it next month and adjust according to the bank policy. This is strongly disapproved of because firstly, there is a penalty amount that you will incur if you don’t pay the EMI timely. The general percentage of the penalty rate is 2%, but it differs from bank to bank and you will be held responsible for all of it. Then there is another problem and that will be reflected in your CIBIL score. Your hard-earned score will immediately go down and will be noticed by financial institutions as well. You will eventually feel the problem reflect on your financial goals because this will reduce your eligibility to get a loan for any other future purposes. Hence, the best option is to remove an amount of money and reserve it just for the EMI payment. Consider the money to belong to the bank and you will not require the usage of your EMI amount for any other needs.
You can check out a variety of the best home loan repayment options from any web portal of your choice, including the MyLoanCare home loan guide to get a thorough understanding of the prospects of your home loan. Long story short, these are some of the best advice out there to help you a clear ongoing home loans quickly so that you can proceed to save up and invest in other valuable assets.