Buying a home is a dream that many people nurture and work hard to realize. Purchasing a house of your own gives you a sense of accomplishment and security. However, the house buying process can be quite tedious, and one of the main aspects of it is taking a home loan.
Home loans have become very popular, and most people opt for this option to buy their dream homes. While taking a home loan, one of the most critical aspects to consider is managing the EMIs. EMI, or Equated Monthly Instalments, are monthly repayments that the borrower makes to the lender. It includes both the principal amount and the interest.
Here are a few tips and strategies that can help you effectively manage your home loan EMIs:
Set a Budget
When you decide to take home loan, the first and foremost thing to do is set a budget. You need to decide how much you want to spend on your home purchase, how much down payment you can make, and how much EMI you can comfortably afford. Several online calculators can help you calculate the EMI based on different tenures and interest rates. Always ensure that your EMI does not exceed 40% of your monthly income.
Choose the Right Tenure
The tenure of your home loan impacts the EMI amount significantly. It is essential to choose the tenure that works best for you. Generally, a longer tenure results in lower EMIs, but it also increases the overall interest paid. On the other hand, a shorter tenure means higher EMIs, but it reduces the interest burden. Consider your income, expenses, and future financial goals before choosing the right tenure.
If you have some extra money, it is best to use it to make prepayments towards your home loan. Prepaying your loan amount will reduce the principal amount, which will subsequently reduce the interest payable. Making prepayments also reduces the overall loan tenure, which means you can become debt-free sooner.
Refinance Your Loan
If you find that your existing home loan is too expensive, you can consider refinancing it. Refinancing means transferring your outstanding loan amount to another lender who offers better interest rates. It can help you save a significant amount of money in the long run.
Increase Your EMI As Your Income Rises
As your income rises, consider increasing your EMI amount. By doing so, you can pay off your loan much sooner than expected, saving you a considerable amount of interest. Increasing your EMI also shows your lender that you are a responsible borrower, and it can help you strengthen your credit score.
In conclusion, managing home loan EMIs can seem daunting, but with proper planning and strategy, it can be done effectively. Set a budget, choose the right tenure, make prepayments, consider refinancing your loan, and increase your EMI as your income rises. By following these tips and strategies, you can become debt-free sooner and enjoy your dream home without any financial burden.
How much home loan can I get on 2 lakh salary?
The amount of home loan you can get on a 2 lakh salary depends on several factors such as your credit score, debt-to-income ratio, employment status, etc. Generally, you can get a loan amount of around 50-60 times your monthly income. Therefore, if your monthly income is 2 lakhs, you can expect a home loan of around 1-1.2 crores.
What is the home loan procedure?
The home loan procedure involves several steps such as:
- Researching and comparing different lenders and home loan options
- Applying for the loan by filling the application form and submitting the required documents
- Verification of the documents and credit score by the lender
- Property assessment and legal verification
- Sanctioning of the loan amount
- Disbursal of the loan amount
- Repayment of the loan through EMIs.