Home Loan EMI Assessment
Home loans in India are being made affordable and accessible each day. Availing a home loan is a massive financial commitment and lays the basis of your monetary situation in future.
Once the home loan approval is sanctioned and you’ve acquired possession of your dream home, managing the home loan EMI (Equated Monthly Instalment) comes across as the next crucial step that requires careful planning of your finances.
Planning home loan EMIs is an important step in the overall home loan application process and should be given due consideration to avoid any pitfalls in future. You need to carefully assess your ability to repay the loan by analyzing your income from all sources, keeping a tab on your expenditure, and keeping a pool for emergency fund.
For our valued home loan consumers or those looking to apply for a home loan, we’ve compiled some simple yet effective tips on managing your home loan EMIs in a structured manner. Let’s check them out:
Keep Home Loan EMIs as your Top Priority
Paying home loan EMIs on time should be your first priority when you plan a household budget. Skipping out on home loan EMIs or delaying them is a risky affair and attracts penalties from the lenders. Defaulting on home loan EMIs for longer periods may make you lose your home too.
One of the best ways to ensure home loan EMI is paid on time is by scheduling it close to your salary date. Always make sure that you’ve sufficient funds in your bank account to avoid EMI failure. Also, paying home loan EMIs on time increases your creditworthiness and boosts your credit score.
Assess Your Income Wisely
Even before applying for a home loan, you must assess and note down your sources of stable income. Consider all sources of additional income and then compare it with your expenses. You must be able to allocate 40% of your net monthly income towards home loan EMI on a safer side.
Anticipate Your Expenditure
Scanning your monthly expenses based on your standard of living is an important part of financial planning to help you manage your home loan EMIs in an effective manner. Anticipate and provision various expenses that would incur every month like children’s tuition fees, grocery expenses, personal expenses, medical expenses, and keeping aside an amount for contingency fund.
Use our to do the math and check the amount of EMI you can commit to every month. Although it’s advisable to pay a higher EMI each month over a short loan tenor to repay quickly, make sure you’ve adequate funds to proportion that.
Keep Loan EMI & Savings Accounts Separate
If you have a working spouse, you get income credits in two different accounts. A pro tip here to effectively manage your home loan EMI is by keeping your loan account and savings account separate. This will ensure that your loan account always has sufficient funds separately to disburse the EMI avoiding any chance of a failure. Though the idea may seem a bit complex initially, but the benefits are far more than the hassle.
Pay an Extra EMI Every Year
This may seem tough in the beginning but it definitely pays in the long haul. Try and pay an extra EMI every year if your lender doesn’t incur any prepayment charges on the home loan. This practice will have a considerable reduction in the outstanding principal amount, especially in the initial years.
Pre-pay Your Loan by Scouring Other Sources of Investment
Yet another effective way of managing your home loan EMI is by prepaying large sums once in 2-3 years. You can do so by investing in such sources that promise good returns after the completion of the term. Pre-paying your loan balance greatly reduces the outstanding principal amount and cuts down on the loan tenor subsequently.
Always Have a Contingency Fund
No matter how well you plan and execute your financial planning, you’ve little to no control over emergencies. If due to a sudden medical emergency, you had to part with a substantial amount of your income leaving little room for home loan EMI, this will have an adverse effect on your loan account status and will hurt your credit score eventually too.
A good tip here that most financial advisors recommend is to keep a contingency fund that can easily cover 3-4 home loan EMIs. Once your home loan application is approved, start building the contingency fund in smaller amounts.
If you meticulously follow the above home loan EMI tips, it will be as smooth as a cakewalk to effectively manage your home loan EMIs. Ultimately, it all boils down to planning and managing your income and expenses wisely to never have to miss a home loan EMI.
Now that you seem fully prepped to apply for a home loan, take the next step with us. Apply for a home loan at an attractive rate of interest.
Just call us on our toll-free number at 1800-200-9898 or reach out to us here. Alternatively, you can also write to us at email@example.com for any queries regarding Home Loans from Clix Housing.