When the common bourgeois acquires a home loan, that is probably going to be their biggest financial commitment. Home loans are one of the smartest ways of transforming your dream house into reality. But as simple as procuring it might seem, it is equally hard to repay the EMIs when one gets bogged down the mire of overheads. One should make it a point to actualize the below points if they were to glide easily through repaying the EMIs.
Try to pay a higher EMI if possible:
There is no better way of ensuring to repay loans before the home loan tenure ends, except for this. By incrementing the EMI amount slightly, one can significantly reduce the number of months or years from the loan period. A debtor must ensure to invest their money in a sagacious manner, one which would generate sufficient funds to increase the EMI repayment.
The objective here is to maximise cash flows. One should compare their monthly payments with their monthly returns on investment. To put into perspective, if one finds that certain investments do not help in getting adequate returns, or cause more loss than profit, then it’d be prudent to pool in the money that goes into them towards repaying EMIs. Try to make investments that give a lucrative return of at least 12–15 per cent.
Try partial pre-payment:
The longer one takes in the prepayments, the higher the loan interest would be charged. Partial pre-payment is the most efficient method of lowering the loan tenure to decrease the loan obligation. Out of the many benefits of partial pre-payment, the most predominant one happens to be the pre-payment amount, which can get as low as 10,000 INR. Income from property deals, hefty bonuses, big gains on stocks and shares, and many more of such incomes can be used for partial pre-payment.
Moving to a bank that charges lower interests:
Moneylenders often lower their lending rates at different time intervals due to their diversified interest rate reset periods. This is one opportunity for one to cull the bank with low-interest rates, and which can be achieved through something called ‘Balance Transfer Scheme’ of banks. Under this preference, the entire unpaid amount can be transferred to another bank with lower interest rates. But one should also keep in mind to not switch frequently as every time one switches to a different bank, they’d have to go through loan appraisal and underwriting processes. This is notwithstanding technical and legal paperwork. The moneylenders also levy a nominal fee, which usually is about 1 per cent of the total loan amount.
If one is able to put into fruition the above steps, then they’d be able to waddle their way out of these EMIs quite easily.