When an individual opts for a home loan, it can be one of the biggest financial commitments that he/she makes. A home loan is a smart way to buy a home without spending all the savings that the individual has accumulated over the years. While availing a home loan has become easier, there is no denying the fact that the idea of paying it off can be quite daunting → From paying-off the home loan EMIs on time, making sure that you have the right amount ready in your account for the EMI deductions to some unanticipated overheads too. However, if the individual is able to manage the finances better, they can pay off the loan availed within the stipulated tenure.
Here, we have mentioned a few ways that would help the individual in paying off the loan that they would have taken from banks and financial institutions. Read on to find out:
Avail The Home Loan From A Bank That Charges Low Interest: Why regret later, while you could plan and choose your home loan wisely and save smartly too. Make sure to choose the loan from a bank that has low interest rates. Many lenders lower their lending rates every now and then, thus saving some handful amount of money on the home loan interest rate. Even if the individual has availed a home loan from a bank which has high interest rates, they can easily switch between banks using the ‘Balance Transfer Schemes’ of banks. Switching between the banks helps the individual in saving money with regard to the interest payable to the bank.
Pay Higher Equated Monthly Instalments (EMIs): One of the best ways to ensure that the individual is able to repay the home loan within the selected tenure is to start paying higher EMIs. The EMIs that the individual is needed to pay is calculated depending on the amount and tenure of the loan. By paying a higher EMI, the individual can cut down on the interest that they need to pay
Manage Funds Properly: The individual needs to ensure that cash inflows are maximised. This can be done by comparing the monthly payments with the monthly returns. Doing this helps the individual identify the investments that are not giving him the desired returns. The investments which do not offer good returns can be withdrawn and used to pay other EMIs or invest them in options that offer good returns.
Make Partial Pre-payment Whenever Possible: The individual can lower the loan tenure as well as decrease the loan obligation as making a partial prepayment. When a partial pre-payment is made, it goes a long way in saving a lot of money when seen in the long run. Since banks that operate in the country allow customers to make a certain number of pre-payments in a calendar year, funds earned through bonus, gains from investments etc can be used to make the prepayments.
Use Mortgage Calculator Prior To Availing A Home Loan: Mortgage calculators which are simple and convenient tools along with being easy to operate help individuals in gauging how much loan they can sustain. The calculator helps in estimating the amount that is required to be saved for the purpose of daily and monthly expenses as well as investments. Apart from that, it also helps the individual in determining which home loan scheme is beneficial for the applicant and can be managed without much hassle.
Avoid delaying and missing EMIs: Don’t miss or delay any of your monthly EMI payments, never! The individual must make sure that delayed payments of EMIs and skipping them is avoided at all costs. This is because, doing this will have a negative impact on the credit score as well as pull out surplus cash from the budget. The applicant must always ensure that the loan availed is never tagged as Special Mentioned Account (SMA).
Cut the extra expenses: Another way to pay off the home loan faster is to cut down on the extra expenses wherever possible. This will help save some money which can come in handy while making prepayments of the loan availed.
Following the above-mentioned steps will enable the individual to pay off the home loan that was availed without them sweating over it. It will also help them to save some money. Given the varied options provided by the banks and other financial institutions, availing a home loan and repaying need not be as daunting as it was in the years gone by. And if you are looking for one now, do try out apps like the BankBazaar Mobile App. It lets you compare and choose from a wide range of home loan offers. No just that, you can also calculate your EMIs and decide which loans suits you the best.
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