Currently, the nation houses one of the fastest-growing real estate sectors in entire South-Eastern Asia, with an investment inflow of Rs.27,000+ (private-equity) during the first 6 months of 2019 only.
The growing demand for housing has been somewhat successfully met by several government-backed schemes and a well-regulated market. The availability of credit in the form of home loans also helps prospective homebuyers procure the property of their choice without experiencing any financial strain.
There are several Housing Finance Companies, both private and public sector players, which offer housing loans to eligible applicants. These credits often come with affordable home loan interest rates, flexible repayment tenor, and large loan amount. Borrowers can follow several methods to manage their home loan EMIs in a suitable manner, ensuring timely repayment of the credit.
How to Manage Home Loan EMIs?
- Manage your funds
One of the essential things to take care of while repaying debt is to manage the inflow and outflow of your funds. Remember to determine your repayment capability before availing a credit; add your liability and expenses with your income to understand what amount you will be comfortable paying as equated monthly installment.
You can also use an housing loan EMI calculator to find the right loan tenure and EMI according to your repayment capability. A robust budget will help you stay ahead of the debt repayment without any issues.
- Select a shorter tenor
Selecting a shorter tenor may increase the sum you pay each month as EMI, but it will reduce the total cost of the loan by reducing the amount payable as interest. A longer tenor will account for smaller housing loan EMIs, but it will significantly increase the total cost of credit as you pay interest for a much longer period.
- Opt for part-prepayment
Part-prepayment is a method to lower the repayment tenor and total sum paid towards home loan interest rates. You can reduce your outstanding principal amount by prepaying the debt; most HFCs do not charge any fees for part-prepayments. It will also improve your credit score as you repay the overall debt faster.
- Go for a balance transfer
A home loan balance transfer is a process to switch lenders and lower the applicable rate of interest and total debt. It is a process where you transfer your remaining credit to another housing finance company that offers a lower interest rate. There are several reasons why you should choose balance transfer, including the provision to avail a top-up loan over and above the principal amount that can help you provide for several additional expenditures.
However, a balance transfer facility has several other aspects like the applicable rate of interest, fees, and charges associated with the takeover, etc. You should mandatorily consider all these aspects before opting for this process.
- Make a higher down payment
Making substantial down payment will reduce the total principal amount, which in turn will reduce the equated monthly installments paid towards the repayment of the debt.
It reduces the risks associated with lending, as a borrower is more likely to return a smaller sum within the given loan tenor. You can use a home loan EMI calculator to determine the same before deciding on the down payment amount.
Market experts have witnessed significant growth in the demand for housing loans in India in the last few years, thanks to borrower-friendly policies offered by lenders across the nation. Borrowers can also conveniently repay their dues and manage their EMIs by following the above-mentioned suggestions.