Purchasing a home is one of the most significant financial decisions you may take in your lifetime. If you are considering the option of applying for a home loan, it can become an even bigger decision. A home loan makes it easier for an average middle-class salaried person to afford a home of their own.
After your housing loan has been sanctioned, the next step is understanding how to efficiently manage monthly EMIs.
Moving into your house is nothing less than a dream come true. While you prep for your housewarming party and make a list of people you want to invite, you must also know how to manage your home loan EMIs. Here is a list of different tips to help manage your home loan EMIs efficiently:
1. Proper Money-Management
Now that you have a home loan to pay, it becomes even more critical to manage your finances properly. One of the ideal ways of doing this is by upscaling your money management skills. You cannot take the risk of messing up your finances, which can make things worse in the future.
As a beginner, you need to make a list of places where you have invested your money. This will include the list of all your investments which you have made, like, EPF, PPF, postal deposits and even ULIPs. The idea behind this is that you must know where your money is and where it is going. If you have invested your money in places where you are paying unnecessary interest, you must focus on closing all those investments and prioritize repaying your home loan instead.
2. Make Lump-Sum Part Payments Against Your Loan
This will substantially bring down your principal outstanding as well as the tenure. During the early stages of your loan, you should ideally target to make partial payments in a lump-sum. Moreover, banks and various financial institutions don’t charge any penalty for partial prepayments. So, check with your banks and plan your bulk-payments accordingly.
3. Create a Separate Fund for EMIs
Create a separate fund dedicated to your home loan EMIs by saving as much money as possible. You can also utilize some of your investment-related accounts to pull your funds. Before applying for a home loan, put your money in a short-term investment plan. Plan it carefully so that you can receive the maturity amount right on time, as in while or before your home loan gets approved.
4. Go For Higher EMIs
A higher monthly instalment might scare you, but it helps you save on the interest. In case you are opting for a long-term loan, say 30 years, your monthly interest rate will be lower than a 20-year loan tenure. So, try to repay more in instalments every month. Using a home loan emi calculator, compare your monthly obligations and plan out your finances efficiently.
5. Opt for a Balance Transfer
In case you have previously taken a home loan and have been paying your EMIs diligently for some time. Say after two years; you feel that the interest charged is higher than other banks. In situations like these, you can transfer your outstanding loan amount from your current bank to another bank of your choice, provided that the bank offers a transfer of loans. With a reduced interest rate, your monthly EMI will also come down to a great extent.
Smartly Invest in a Home Loan
Accomplish your dream of owning a house with reliable and trusted financial institutions like Axis Bank. They offer home loans starting at INR 3,00,000. The Axis Bank home loan comes with benefits such as easy EMIs, attractive interest rates and an easy application process. Before taking a new loan, carefully assess your appetite for loans.