How To Manage a Home Loan EMI?

One of the biggest loans most people will ever take will be the home loan. Since it is the biggest loan they take, it also comes with the biggest EMI. This means that the biggest question that any home loan customer will have is going to be about the EMI and how they are going to manage to pay it back. Now, there is no need to panic because there are ways in which you can manage your Home Loan EMIs to make sure they don’t become a burden on your expenses. With any home loan, it is absolutely essential that you are thorough with the details of the repayments and any and all facilities that the loan provides you with.

So without further ado, here are some of the things that you can do to make sure you are smart with your home loan repayments.

• Use a Home Loan EMI Calculator

A Home Loan EMI Calculator will require just the amount you plan on borrowing along with the interest rate and the processing fee. Once this information is put in, it will tell you the exact EMI within seconds. This means that you can dispense with the old pen and paper and inaccurate calculations. You can also keep adjusting the loan amount till you arrive at the EMI best suited to your income.

• Take Only What You Can Afford

This has to be golden rule of any loan. Always take only what you can actually afford to pay back. Generally the banks won’t give out loans, the EMI of which exceed a certain percentage of the monthly salary but even those EMIs can get too heavy at times.

• Make Part Payments

If your loan allows it and if you find yourself with a lump sum of cash in your account, then it is a good idea to make part payments towards your loan. This will reduce the amount you owe by a substantial amount which can also lead to smaller EMIs.

• Interest Rates (floating or fixed)

Banks tend to offer both floating and fixed interest rates. The floating interest rates are linked to the economic situation and can exceed or be lower than fixed interest rates but that also means that you will not know the EMI till it’s time to pay it every month. If you feel that you can’t afford such uncertainty then it is best to go with a fixed EMI.

• Don’t Pay Back For Too Long

If your current EMI is not too big and you can afford to pay more towards the loan every month, then it is probably best that you do since that will reduce the duration of the loan and the interest that you have pay.

• Switch The Banks

Lest say you have taken your loan and a few years into the loan you find another bank that will offer you a lower interest rate than the current one on your home loan, then consider switching. Switching to the new bank will allow the amount you pay as interest to come down and also allow your EMI to come down. If your EMI does appear to be coming down then the suggested thing to do would be to keep the EMI the same but reduce the tenure of the loan.

As we said before, home loans are really big loans which come with big EMIs so it’s absolutely necessary that you are smart with the repayments of these loans. These few tips should help you manage your EMIs better but don’t be afraid to seek the help of financial experts in case you have any questions.