Home Loan EMI: Can’t afford a home loan EMI? Fix the problem with these tips Home Loan EMIMany people do not pay much attention to the interest on home loans with the idea of owning their own house. But at the time of EMI repayment, they are afraid of rising expenses and EMI burden. Many financial institutions have seen a significant change recently as home loan interest rates have crossed the 9 percent mark. With the rise in interest rates, experts suggest that home owners and buyers should reconsider their financial strategies.
Owning a home is the dream of every middle class family. They save a part of their earnings to fulfill this dream. By saving some money with them, they can fulfill their dream of owning a home without taking a home loan. But many people do not pay much attention to interest on home loans with the idea of owning their own house. But at the time of EMI repayment, they are afraid of rising expenses and EMI burden. Many financial institutions have seen a significant change recently as home loan interest rates have crossed the 9 percent mark. With the rise in interest rates, experts suggest that home owners and buyers should reconsider their financial strategies. It is suggested that ways be explored to reduce the impact of increasing equivalent monthly installments. So let’s take a look at the expert suggestions to escape from the home loan EMI pit.
Home Loan Advance payment
Opting for prepayment can reduce the loan tenure and total interest payments. But prepayment may not offer significant savings if one is nearing the end of the loan tenure. It is a good idea to consider any investment opportunities that can earn you a higher return than the interest rate on your home loan. It may be more beneficial to invest additional funds instead of prepaying the loan. Consider prepaying the loan partially if you have surplus funds and a substantial loan term. This reduces the EMIs and keeps the loan tenure unchanged.
Home Loan EMI OD option
It is advisable to opt for a home loan overdraft facility to prepare for a rate hike. With this facility a lump sum can be deposited in a savings or current account linked to your home loan account. If someone receives a bonus, a big paycheck, or an unusual raise, depositing this money into a HLOD account can help take advantage of the situation. Deposits are treated as prepayment or part-payment against the home loan. Interest is charged on the net amount.
Home Loan Extend the time limit
In case of budget deficit or surplus funds, extension of loan tenure can be requested to keep the EMI payments at the previous level. For example, you can invest Rs. Suppose you have a home loan of 30 lakhs. Your EMI is around Rs. 38,765 will be. The interest rate will rise to 2 percent. Even if your EMI is Rs. 44,986 will increase. To avoid this increase, you can increase your EMI by Rs. 38,765 can be requested to extend the loan tenure to 38 years. But this is not a good option as it increases the total interest burden. You end up paying a huge amount of interest on your loan amount. Further, experts explain that most banks do not extend the loan tenure beyond 30 years.
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