Home Loan Management

People  always dream or prefer to be in a position when they can proudly call themselves  the owner of a home. But sometimes,  purchasing home becomes very tricky as it involves great deal of finance. As the prices for properties increases, it becomes difficult to ensure buyer’s ability to pay the price of the property easily. Applying for home loan for properties remains the only option then and repaying the same through Equated Monthly Installments (EMI) is bit challenging.

Here are the 5 tips for managing home loan in an easy and smart way.

Opting for Bank with Lower Rate of Interest
No one would dismiss the option or the idea of selecting lender or bank with lower interest rates. So, the moment you gain knowledge of a dip in the interest rates on home loans, a switch should immediately be made. Else, check for the bank which offers comparatively lower interest rate on home loan.  In this case, the remainder of the home loan can be paid along with the prospect of acquiring Lower Rate of Interest. Each time a bank is selected paperwork related to loan appraisal and underwriting process is carried out. A golden advice for the people seeking home loans is to conduct a quick survey of various banks and financial institutions on priority basis. This normally is inclined to reduce interest rates during festival season. It is because during this time period people are also inclined to purchase the property or invest in real estate.

Taking Care of Funds
Having a good understanding of “Cash Flows” is very important. This leads to the perfect balance between Cash Inflows and Outflows, i.e., monthly payments and monthly returns, respectively. The return on investments (ROI) should be slightly higher, as this will give you a boost and the objective of repaying the home loan would get enhanced. Save yourself a good amount by making smart investment decision of gain at least 12-15% on the investment. Out of which around 10 to 11% of the income will be used to repay the interest and the differential amount can be used for the pre-payment of the home loan.

Higher Amount of EMI
Many people get shocked on being advised for selecting the higher slab of EMI’s for home loan. However, such a step would enable the borrower to finish off the installments much in advance and thus, to acquire a peace of mind. The buyer, hence, is advised to make smart and prudent investment in order to improve the equity so that the raised amount for EMI can be afforded.

Partial Pre-Payment
This is very good and ideal way to ease the burden of paying the heavy EMI’s on the particular home loan amount borrowed by you. The benefit for this is the banks do not charge any fee or surcharge and the amount for pre-payment can be as low as Rs. 10K. Numerous income-types can be used for the same such as – big gains from stocks or shares, gifts from parents or family members, income earned through rents or any other one time sort of earnings. Through this the burden of paying early installments can be negated and the flexibility of utilizing earnings from other sources in making pre-payment can be used in a smarter way.

Don’t Think of Skipping EMIs
One of the golden and the most precious advise – one should always be particular and careful about the value and time period of EMI’s. At no cost your loan should get tagged as Special Mentioned Account (SMA). SMA is a category of loans in the bank when the payments gets delayed and the grace period is of 30 to 90 days. This is why it is suggested to all the clients for opting home loans, once all the previous dues have been paid.

Make sure that unnecessary sorts of tensions don’t clog the minds while seeking financial assistance. These tips to manage home loan are tested and tried. Must follow these rules for safe management of home loan and payments.