Here are the pro tips to manage your home loan

Are you looking for a home loan? Want smart tips from experts? A home loan is a long-tenure loan hence, it needs your commitment for a longer period of time. Here are some useful tips related to your home loan and how you can manage it better.

What is a home loan?

You can get a home loan for the purpose of buying a home from a bank or NBFC. In the case of a home loan, the property’s owner (the borrower) hands over the deed to the loan provider. The lender will return the deed once all payments and other terms of the loan have been met.

Smart Tips to Manage Your Home Loan

●      Manage Your Finances First

Cash flow management should be your primary focus when dealing with loans and investments. First, it’s important to sit down and create a monthly budget and do everything in your power to stick to it. You’ll be able to better monitor your finances if you do this. Don’t forget to factor in both the monthly outflow of funds in the form of payments and the monthly inflow in the form of investment returns.

●      Pay Larger EMIs

It’s recommended that you buy a home when you’re still young because you’ll have fewer obligations at that time of your life. Now is the moment when you can afford to make larger EMI payments on your house loan because you are financially stable and everything is running smoothly. The debt will be paid off sooner than usual, relieving some of the pressure. The interest you’d otherwise pay can be avoided with this method as well. You should prioritize paying off your obligations, regardless of your age. It’s better to put that extra cash toward your EMI than to waste it on frivolous purchases.

●      Pay a Bigger Down Payment

Now is the time to cash in on any investments or savings accounts that aren’t generating significant income. Your home loan probably won’t cover the entire cost of the house. A down payment is an upfront cost that you must cover. You should expect to put down between 20% and 30% of the home’s purchase price. It’s preferable to put down larger sums of money for the initial purchase price if at all possible. If you pay a larger sum upfront, you may be able to lower your EMI payment. An additional risk is that this may shorten the length of your employment. You can benefit from both a low EMI and a short loan term because they both help you save money and lighten your financial load. This will allow you to pay off your debt sooner and save money on interest.

●      Transfer Balance for Lower Interest Rates

Multiple rate reductions are made by lenders due to varied interest rate reset periods. Alternatively, you might have gone with a house loan that had a high interest rate before learning that other banks offered the same credit at a cheaper rate. Selecting the banks that offer the lowest interest rates will help you save a significant amount of money. Banks’ “Balance Transfer Schemes” can also help with this. To qualify for a cheaper interest rate on a loan, you might use a practice known as “balance transfer” to move the loan’s principal balance to a new lender. Keep in mind that some banks impose fees for transferring a loan amount, so don’t do it just to get a slightly lower interest rate. You should make sure the money you save justifies the cost of the balance transfer fees. When transferring a balance, you’ll need to fill out all of the necessary paperwork and go through the loan underwriting and appraisal processes from the beginning again.

●      Go for Partial Prepayment

The interest you pay on a loan increases the time it takes to pay it off. Loan tenure and payments can be reduced quickly with partial prepayment as it has several benefits. To begin with, there is typically no fee associated with using the facility, and the minimum prepayment amount is often only Rs 10,000. One-time incomes such as a large bonus, large gains on stocks and shares, income from the sale of property, income from any maturing tax-saving investments or fixed deposits, gifts from parents or family, rental income, and so on, can be used to prepay a loan in part.

●      Money management

Your ability to keep track of your money is more crucial than ever now that you have a home loan (and possibly other loans) to repay. Learning to handle your finances is a crucial step in this direction. You can’t keep making financial mistakes and then blaming them on other people, circumstances, and so forth. Have no fear! You can rely on us to show you the way.

Start by compiling a list of all your financial holdings. You should include your employees’ retirement account (ERA), postal savings account (PSA), postal deposits (PDs), and unit investment in insurance policies (ULIPs). You must have a plan for your financial resources. You should terminate any investments that are costing you unnecessary interest and put the money toward paying down your home loan.

Summing-up 

You’ll need to be a financial whiz if you want to pay off your loan without making any mistakes. Borrow only what you know you can afford to repay and work hard to pay off your loan and other debts as soon as possible. Your other major financial goals should not have to take a back seat if you use your own money to buy a house. You should have enough cash left over after making the down payment. Visit, Piramal Finance to improve your finance skills as they have many articles and blogs to improve your finance skills.