Whenever you think of any home loan, the rate of interest payable, and the tenure of repayment, you automatically think of tracking and managing the EMIs properly. You can always take a few steps with regard to staying on track with your home loan EMI and making sure that you are managing the home loan in the right manner so as to get out of debt sooner than staying put for the entire tenure.
However, first steps first as they say! You should adopt the following strategies to remain firmly on track with your home loan EMI:
- Be mindful of the exact home loan amount that is payable as the EMI and note it down somewhere if you are in the habit of forgetting.
- Set up an auto-debit facility from your salary/savings account to ensure that the money is credited to the home loan account on a particular date. This way, even if you do not remember, the payment will be made on time without any delays and penalties.
- Make sure that you have ample funds in your salary/savings account equivalent to 2-3 months’ home loan EMIs at any given point in time. Once you achieve this, it will be a breeze according to financial experts.
- Make sure that you ask for your home loan statement every year and observe the amount of principal and interest that has been reduced and the amount which remains along with the number of EMIs.
These are some strategies that will help you stay on track with your home loan EMI without any hassles whatsoever. You can always use a home loan EMI calculator SBI for working out how much is payable and the entire breakdown of the loan amount and interest throughout the total loan period. Online calculators are available at the portals of various other banking and financial institutions as well.
Some added strategies for managing and lowering the EMI burden swiftly
- You should choose your home loan at a lower rate of interest after comparing all available options, depending upon your credit score, eligibility, and other factors.
- Compare home loan interest rates online from numerous portals and other sites before signing on the dotted line and choosing loan offers.
- Choose a longer tenure for repayment on the home loan. The longer this tenure, the lower will be the EMI payment every month. You should choose a lower tenure for initially reducing the EMI outgo every month and then scale up later on. However, you should know that the longer you stretch your home loan, the more interest you will pay ultimately.
- Ultimately maximize EMI payments with an increase in income and surplus funds. Pay off as much as possible in terms of prepayment installments on a periodic basis. There are zero penalties in most cases. This will help you lower the home loan tenure and overall principal and interest outgo alike. As a result, maintaining the same EMI amount subsequently will lead to the loan burden coming down swifter than you expected. This happens since paying off a chunk of the principal automatically means a reduction in the EMI amount. Yet, if you maintain the same payment figure every month, this additional sum will also be slashed from the home loan.
- Try and make a big down payment as much as possible. This should ideally be anywhere between 15-30% or even higher if it is possible. The higher you give, the lower will be your LTV (loan to value ratio). This will also enhance overall eligibility for the home loan in question while also scaling up chances of getting approval likewise.
- You can also refinance the loan at a lower rate of interest if you feel that you are paying higher than the market rates. Yet, make sure that you factor in existing charges/penalties payable and work out how you stand to save by making the switch or opting for a home loan balance transfer. Technically it stands to benefit customers in the early years of the loan when interest is comparatively higher.
- You may also consider negotiating terms and conditions with your financial institution or lender. If you have maintained a good professional relationship with the current financial institution, then you can always try and negotiate the present service terms of the home loan that you are repaying. You may also get lower rates of interest on the loan in this way or some added benefits.
Keeping a tab on your home loan EMIs should not be too difficult provided you follow the above-mentioned tips. Smooth management of the home loan repayment process and the EMIs is really vital. Make sure that you plan carefully and stay informed and alert throughout the entire tenure.