5 tips for Home loans

5 Easy Ways To Manage Your Home Loan

If you’ve taken a Home Loan or plan to take one, here are a couple of tricks up your sleeve to manage it better. Stay ahead of your home loan EMI with these 5 simple tips.

Make repayment a priority

Paying EMIs on time boosts your creditworthiness. It may be difficult at first, but you must remember that a good credit history is an essential part of your financial journey. Future lenders judge your credibility based on your Credit Score. Failure to pay your Home Loan EMIs on time take a major blow on your Credit Score. As a result, the chances of your loan and Credit Card applications getting rejected in future increase significantly.

Bonus EMI Tip to make sure you maintain your creditworthiness: Schedule the EMI close to your salary date. This ensures sufficient funds in your account and minimize chances of default due to lack of funds.

Try not to skip any home loan EMI, maintain your credit score to avoid any penalties from your lender.

Use lump sums to prepay

Paying off your Home Loan as soon as you can is the one thing every homeowner dreams of. So, opting for a high monthly payment can help you reduce the loan tenure. As a result, the total interest that you’re supposed to pay to the lender also goes down. By opting to pay more every month, you reduce your own financial burden. This helps an individual invest in other projects of life like retirement planning, a car loan or even a second home.

Pay an extra EMI every year

Paying an extra EMI every year can be tough initially. But it helps put to rest your home loan. There is usually no prepayment charge for floating rate term loans. By paying an extra EMI every year, you can reduce your overall outstanding principal amount. Lenders are unlikely to complain if you repay a little extra every year. Over a 10-12 year period you find your loan paid off soon, erasing the stress of the loan.

Switch to a lower interest rate

Be aware of market fluctuations and updated with reduced loan interest rates available by different banks. Switching to a lower interest rate than your existing one will shave a few years off your loan.

P.S. – But be careful. Don’t jump too many times at low-interest rate differences. If you’re getting a good dip in the rate of interest, you should definitely consider switching. But in case the difference isn’t much, it might be a bad idea to opt for that switch.

Get the math right

There are tools available online by banks and NBFCs that help you determine your financials when you repay a Home loan. For example: The Home Loan EMI calculator gives a clear understanding of monthly EMIs when you enter the details of your loan amount, tenure, interest rate, and processing fee calculation.

Loan amount: You have decided on a property and are aware of its price. After you have acquired your down payment, you will have a better idea of what loan amount you need to apply for. You then have an idea of the amount of your EMI’s.

Tenure Of Home Loan: Decided the loan amount, choose the tenure you would like to opt for, starting from 6 months to 30 years. Keep in mind, the longer the tenure of your loan, the higher the total amount to be paid back will be.

Interest Rate And Processing Fee: The next thing you need to enter is the interest rate offered by your preferred bank. Generally, banks have a 2% processing fee on Home Loans which needs to be accounted for as well when calculating your monthly EMI.

Prepayment Option: Some people prefer to prepay a certain amount of their loan. The Home Loan EMI calculator gives you an option to specify whether you wish to prepay your loan amount. Your monthly Home Loan EMI amount is calculated based on whether you choose a Yes or No on the prepayment option.

The Home Loan EMI calculator is a simple, fast and reliable source of information to calculate your Home Loan EMI’s.

Do A Quick Rain Check Before You Apply For A Loan For A Quicker Procedure

Step 1: You can also use our loan calculators to check your eligibility and you’ll get an assurance of your current capacity.

Step 2: Let HomeCapital take care of your down payment requirements

buying your first home

Simplify your approach to buying your first home

Buying your first home may seem like a tough task. But with a few simple guidelines and a little help, you can breeze through the process without much stress.

Here are a few tips to consider before or during the journey of buying your first house.

Map out your reasons for the home

As much as the excitement of buying a new home can thrill a person, you need to sit down and wrap your head around the basic questions of buying the home.

Are you looking to stay in the home? / is it just an investment?

This makes it easier to figure out your requirements of the home. This can range from ‘the number of rooms in the house’ to amenities provided. It helps you focus on a property that could be a long term investment. This also helps you pick between a second sale house and one that is under construction.

Check your finances

There are three financial points that influence the house you plan on buying.

First, save up for your down payment. This is the minimum amount needed to be paid at the time of purchase of a home. It ranges from at least 5 percent to 20 percent of the price of the property you are looking at. The more you set aside for down payment, the lower the amount needed to be borrowed through loans and mortgages.

Keep a track of your credit score. This score makes it easier to get approved for a housing loan.

Finally, estimate the total cost of the property purchased. This includes parking charges, stamp duty, registration charges, new furniture / furnishings for the future.

It isn’t just about what you can afford now but also about the future.

Ask the experts

Use skilled professionals to help make the journey easier. You may need to spend slightly more but is useful to understand the different parts that come into buying a new home. There could be unpaid property taxes, understanding the usable area in a home; all these factors can be avoided with the help of professionals.

Real estate agents help understand the different prices in a locality and which locality is best suited for your needs. Invest time in meeting with your local banking agents to help pick out loans that are better suited to your needs. Make sure to run the legal paperwork by a lawyer. This will help protect your interests in the process. But don’t forget to do your homework first.

Explore the neighbourhood

It is crucial to survey the neighbourhood. For working professionals, it is important to understand the commute to work. How close is the nearby train station? Can one walk to work? For a family, the need for a good school in the neighbourhood, a nearby hospital, a supermarket and a cinema are top priority when it comes to the location of the house.

It is also important to find out about the future development of the neighbourhood.

If you are planning on investing in a rental property, look for localities with high-rent or highly populated areas. Choose wisely and your home may be your best investment.

Keep your checklist ready and secure your loan

Once you have checked everything off your list, it is now time to secure the best loan for you. Think about the fact that a short term loan often has a lowered interest rate than a long term one, but a larger EMI. It is ultimately your decision. You have to decide how much time you need to repay your debt, within a given span of time.

The best way to start the process for finding a home loan in India, best suited to your needs, is to check for the lowest home loan interest rate. Look at the additional fees and charges such as the processing fees and prepayment charges. Make sure you pass the eligibility criteria. Check the other offers provided by the lender. These include prepayment facility, customized insurance scheme, online account access, etc and different loan repayment options.

Remember that banks, housing finance companies and other lending institutions calculate home loan eligibility on the basis of various factors like age, income, credit score, property value and work experience.

The next step is applying for the right house insurance. This will protect your property and ultimately makes the process of buying easy.

Keep looking for the best

Always remember to keep looking until you find a home better suited to your needs. At times you may get carried away with fancy furnishing and grand views and landscapes. Remember that these may increase the maintenance of the home. It is important to think minimal, not extravagant.

Keep in mind that the first house you like may not always be the answer to your prayers.

For homes that are under construction, visit ready buildings by the builder for a clear understanding of what you can expect.

Resale sale Value is an important aspect to consider before you plan on investing in a property. Most property buyers focus solely on prime locations or the budget of the property. If you choose the wrong estate or location, it is possible that your future sales price will always be less than the other homes around it.

After you have bought your dream home remember to fill rooms with basic furniture and build up from there. This helps protect finances and keeps you stable with your loans and mortgages.

Conclusion

These simple but important points can help make the process simple and as smooth as possible. Now the question that arises next would involve down payment and your current savings account.

You are probably waiting for the right time when your savings account is ripe with the exact down payment budget you had set for your dream house, but here’s the truth – You might take years until you reach that ‘right time’ and probably end up settling for less.

The good news is, you now have an option where your down payment is taken care of. Don’t believe us? Check out the HomeCapital Program.