How the EMI makes a difference to your life

How the EMI makes a difference to your life

The EMI you pay towards your home loan can strain your finances, or be just a temporary blip on the horizon. Here’s how you can take the sting out of paying the EMI.

All those who refrain from taking a home loan to buy a house are actually afraid. They are unsure about being able to repay the loan while also juggling the demands of a household. But you might not too much financial jugglery if you calculate the potential EMI burden before you take the loan. Here’s how:

→ Insist on lower interest rates

The interest rate is the single most important component of your home loan. The higher the loan rate, the more expensive the home loan becomes. Correspondingly, the EMI also rises, as does the overall repayment amount you pay to the housing finance company. Thus, the trick is to pick a home loan product with as low an interest rate as is being offered currently. The lowest home loan rates are 8.5%, while some banks offer 8.4% to women applicants.

→ The EMI should not exceed 50% of your income

Leading home loan companies will tell you that when choosing the loan product and basing your calculations, make sure that the EMI does not exceed 50% of your monthly income. The higher the EMI, the lesser the amount of money you are left over to contend with the rest of your household expenses. Use a home loan EMI calculator to manipulate the different figures involved – principal and tenure – to arrive at a desirable EMI computation. The EMI calculator for home loan helps you understand the future course of monthly expenditure, and how you will need to allocate your income henceforth.

→ Make a repayment plan

You may take a long tenure loan, say, spanning 15 to 20 years. You repay the loan via monthly instalments, called the EMI. However, the EMI comprises the principal and the interest, with the first few years of the loan spent in repaying only the interest. If you wait out the entire tenure of the loan, you end up repaying a lot more money than you initially borrowed. So it is important to repay the money incrementally – aim to save Rs 5,000 every month and repay a chunk of money every quarter. You can also repay a larger sum from your annual bonus or savings. This way, the loan is repaid faster.

→ Team up with the best home finance company

Choosing the best housing finance company for your home loan needs. Leading home loan companies offer competitive home loan rates, easy application and disbursal processes and quick turnaround times. They also offer flexible repayment options. You can find the best home loan companies in India with a little bit of research – look for award winning companies or products, customer testimonials online, or ask those who have recently taken home loans about their experiences.

These simple pointers will go a long way in helping you ease the home loan burden on your finances.

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