Going for a home loan is one of the biggest financial decisions that people can make. After all, home loans have become a popular technique for you to own your next dream home without hampering too much of your life savings.
However, mismanaging a home loan has its own set of dire repercussions, some of which are extremely difficult to overcome that they will eventually take a toll on you. The root cause of these problems is always the lack of knowledge on home management, and subsequent preparation that anyone needs when settling loans. Today, we are going to give you five of the best tips on how to make your home loan work for you, and not the other way around.
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Pay your Equated Monthly Installments (EMI) on time.
Equated monthly installments, or “EMI”, is simply your fixed monthly payment for the home loan you made. Paying these on time automatically boosts your credit scores to your bank, where soon they can offer you lower interest rates!
On the other hand, prepare to face quite the hefty penalty charges should you fail to pay your EMIs on time. It would be better to schedule an EMI payment close to your salary date to ensure that it never gets left out.
Pay more… if you can.
Enough said, paying more of your EMI amount is an efficient way to reduce the number of months needed to complete your home loan. This is not done easily though, as you must first prove to your bank that you generate ample income monthly to be able to pay off a higher EMI amount.
Transfer to a bank with lower interest rates.
Banks with lower interest rates are the best way for you to keep your savings as intact as possible. Usually, banks lower their interest rates depending on time intervals, which you can determine as you do your research. Afterwards, you may opt for a “Balance Transfer” scheme, and go through tons of legal paperwork that will move the unpaid principal amount from your old bank to your new bank.
Use a home loan calculator.
Home loan calculators are now being used by a lot of new homeowners because they’re so easy to use! They are simple, convenient, and execute their purpose effectively-- that is, breaking down all your mortgage payments, comparing it to your monthly income, and eventually determining the best loan scheme for your situation.
Try a Partial Prepayment scheme.
A partial prepayment scheme allows anyone to significantly cut the costs of their EMIs before the loan tenure even begins! After all, partial prepayments have major long-term impacts for tax-saving investments, and banks do not charge any fee for this scheme!
