Home loan is a great and easy option for the finance of a new home, but managing a home loan is not as easy as you think. The term of the home loan is long, so you get attached to it for a long time. The term of the home loan can be up to a maximum of 30 years. This means that you will have to pay EMI for 30 years and it is not an easy task.
Smart tips to manage home loans
Manage your finance
Your first motive for any loan or investment should be to manage your budget and increase cash flow. To achieve this, make a monthly budget and stick to it for the whole month. With this, you will be able to keep an eye on your monthly income and expenses. Along with the monthly return on your investment, also include your monthly payments, which is the outflow of your fund.
Pay more EMI
The younger you are, the less the burden of responsibilities and that is why experts advise that you should buy a house in your youth. This is a time when you do not have any problem of money and life is going on smoothly. In this case, you can also give more EMI of home loan. This will reduce the loan burden on you in a short time compared to the normal period. With this, you will also be able to save on interest. Whether you are young or not, in any case your first objective will be how to reduce debt as soon as possible. If money is coming to you, instead of blowing it on luxury, get your EMI increased.
Pay more down payment
If you have good savings in your account or you are not getting much return from investment, then this is the right time to use it. The amount of home loan that you will get will not be enough to buy a house, you will also have to pay some amount from your pocket, which is called down payment. The down payment amount is usually 20-30 percent of the total cost of your home. If you have enough money or you can arrange, then it is better that you pay more down payment. This will also reduce your loan term. In both cases it is beneficial for you. Whether it is low EMI or short duration, both will save your money and the burden on your pocket will also be reduced. With this, you will be able to repay your loan quickly and will not have to pay much interest.
Balance transfer at low interest rates
Due to the diversified interest rate reset period, the lenders have reduced their interest rate several times. It may also be that you have taken a home loan at a higher rate of interest and later you know that other lenders are offering home loans at lower rates. By choosing such banks that are offering low interest rates, you can save a lot of money. You can take advantage of this through the balance transfer scheme of banks.
Under balance transfer, the outstanding amount of your home loan principal (principal amount) is transferred to another bank. This is done so that interest rates are reduced. But before transferring the balance, make sure that you are not doing this only on the slight difference in interest. Many banks also charge for switching. So make sure that you do more savings than penalty while transferring the balance. For balance transfer, you will have to go through various procedures other than loan appraisal and paperwork.
Try partial prepayment
The longer you delay in paying the loan amount, the more interest will have to be paid. Therefore, paying a little bit ahead of time is a fast way, by which you can reduce your loan term. There are many benefits of partial payment. First, banks do not take any money for this facility and the pre-payment amount is less than 10 thousand rupees. A big bonus, shares and big gains on it, income from property sold, tax saving investment, fixed deposits maturing, gifts from parents or family, rental income or partial prepayment of one time income Can be used for.