Repaying a home loan can be a huge challenge for many people. This is because home loans tend to have long tenures (15-30 years) which means you under a constant financial strain for decades. However, you can’t afford to miss a single EMI because it can hurt your credit report and attract a heavy fine as well. So, what can you do to ensure that you are able to pay every single EMI on time?
There are various ways to save money which can help make repayment easier for you and also prevent your name from being put on a loan defaulter list. Some of these are:
1. Learn how to invest your money
Keeping your money in a bank account won’t fetch you a good return. What you need to do is learn about various types of investments and build a strong portfolio gradually over time. For instance, fixed deposits offer guaranteed returns at an interest rate of 7% to 8% or even more. You can even put your money in tax-saving fixed deposits which have a fixed tenure of 5 years to enjoy tax benefits.
Mutual funds are another good option as an investment. However, it has a lot of moving parts and there are some risks too albeit with the reward of higher returns. So, it’s best if you learn the basics first and increase your investment slowly as you become more informed.
2. Ask for a lower interest rate
Since the home loan interest rate alone affects the EMI to a huge extent, if you can get it lowered, you can reduce the EMI amount too.
If you have been a good customer of your bank and have been paying the EMIs without fail, then you can talk to them directly and request a lower interest rate. If you have a high creditworthiness to back up your request, you can get a small reduction in the interest rate which can make repayment a lot easier.
3. Go for home loan balance transfer
If your bank refuses to lower the home loan interest rate, then you also have the option to take your business elsewhere. You can approach other banks that are offering a better interest rate and flexible repayment options. If you are able to convince one of them to take the loan for you, then you are all set.
In home loan balance transfer, your loan’s balance amount is transferred to another bank. The new bank repays the old loan for you and puts a fresh loan in place which is the balance amount. However, the new loan has a lower interest rate and easier repayment terms which reduces your financial burden.
4. Spend your money wisely
One of the biggest reasons why loan borrowers end up on a loan defaulter list is that they fail to manage their income properly. You should always try to save as much as money as possible on your income by spending it smartly and avoiding wastage as much as possible.
The following are some tips on how you can to save money for your loan’s EMIs:
Once you have started repayment, find out the various ways you can lower your financial burden. In that enterprise, the tips shared above should help. Good luck!
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