How to Ensure that your Home Loan does not Become a Burden
When Rajiv Nigam, a marketing manager from Gurgaon, applied for a home loan for his new home, he has already chalked out a repayment plan. He says, “Home loan repayment was one of the top priorities for me and I already started planning the EMIs when I applied for the loan.”
As the property was still under construction, Rajiv took a moratorium for 12-months on the EMIs and just paid the simple interest on the loan amount. During the 12 months, he aggressively saved for accumulating funds that can help him cover the EMIs for at least a year. He even sold the stocks which were underperforming, kept the final settlement he received from the previous employer aside and also deposited money in a recurring deposit.
While every borrower should be as dedicated as Rajiv when it comes to repaying a home loan, only a handful of them actually are. Borrowers who have taken the best home loans and want to ensure that their loan doesn’t become a burden should definitely use the tips mentioned below.
Increase the EMI Amount as the Income Increases
One of the most effective ways to reduce the EMI burden is to increase the EMI amount every time your income increases. For instance, if your salary increases by 10%, you can easily increase the EMI amount by 5%-7%. Even if you are only able to increase the EMI by a small amount, go for it as it’ll have a significant impact on your loan tenure and the total amount you repay. However, before increasing the EMIs ensure that you’ll be able to pay the amount every month without fail.
Balance Transfer
If you have been repaying the home loan for around a year, you can also transfer your loan to another bank offering loan at a cheaper rate. This process is known as balance transfer and several borrowers use to experience significant savings. However, a balance transfer is not something that you should opt for if you have been repaying the loan for more than 2 years as most of the interest on the loan is paid in the first 2 years. Also, check the terms and conditions of the new lender and additional charges for transferring balance before making the decision.
Make Some Lifestyle Changes
Making small changes to your lifestyle can take you a long way on your loan repayment journey. Cut down the unwanted spending and luxuries until the loan is repaid. Right from dining out, movies, to weekend gateways, you can make a number of changes that can help you accommodate higher EMIs.
Also, when searching for home loans, try online home loans as you can get excellent deals on loans on the internet. Use the tips mentioned above and make sure that your only focus is repaying the loan. Adopt this approach and you’ll surely be able to repay the loan is a smooth manner.
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