Managing Home loan EMI


When you are taking the loan, you only think about the maximum amount you can borrow from a bank, but not much worry about managing the home loan effectively. There is no specific rule to be followed because every individual has different financial liabilities. 

Home loan EMI

Below are some of the important rules to be careful while paying EMI.

Best 5 ways to manage home loan EMI

Giving priority for repayment

We should make sure to pay Home Loan EMIs on time which boosts our credit. Take care that EMI should be close to your salary date to ensure sufficient funds in your account and decrease the opportunities of default because of lack of funds. If we skip an EMI for one month, it affects the lending institution. It creates a negative impact and also negatively affects your credit score and enlarges fault can result in your home being attacked by the lender.

Use lump sums to repay

Bonuses that are taken from insurance policies should be used to prepay a part of the home loan on time. For example, by paying Rs 1 lakh after just three years for a Rs 50 lakh loan with an interest of 9% for 15 years, you can easily save about Rs 1.9 lakh and decrease the tenure by five months. It is very much beneficial to make the lump sum payments in the very first fifty years of the loan when the main and important outstanding is high.

Decrease the interest outgo by paying more

If you take an EMI of 35,000 rupees, it may look bigger than an EMI of 23,000, but actually larger EMIs are best and more beneficial. For example, if you choose for a large and extended tenure to pay less EMI every month, then you will really land up paying more and more interest outgo, but if you choose for more monthly outgo for only shorter periods, it is much more beneficial.

Paying an extra EMI every year

Make a habit of paying an extra amount of EMI every year. In the starting, it can be tough, but over 10-12 years it creates a great impact. The institution which lent you the money will never complain of paying an extra EMI. By paying like this you can decrease your overall outstanding principal amount.

Refinance loan to cut the burden

It is better to move to a lender who offers better rates. Suppose you find that the total amount of your home loan can become lower. It is better to make this switch. Lenders will decrease the rates at different times. This offer will help you to save on interest by moving to a lender offering fewer rates.

If you skip an EMI, it leads to heavy penalties and negative impact on your credit score as well.

Scour Cheaper Interest Rates

This is a very important step to be careful before opting for a home loan. First of all, choose the bank which offers the cheapest rates on your loan, then compare interest rates and choose the better option.

Prioritise and schedule

It is also one of the important ones to be noticed and to give much importance to the repayment. Skipping an EMI makes you lose your face with the bank. If you delay further, the property or home will become bank attached property.

Use EMI calculators

Using EMI calculators, we can estimate the home loan instalments that have to be paid every month. It also provides accurate insights into EMI repayments. It makes it easy to choose suitable and beneficial home loan schemes. So, it is advisable to opt such tools in taking decisions on EMIs and home loans.

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