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5 Simple Tips to Manage Your Home Loan Like a Pro

Building, renovating, repairing, or buying a house is like a dream come true, and home loans tend to be your companion in the same. However, opting for a home loan is a long-term commitment that demands utmost determination. There are a few preparations that you must make before and after buying a home loan. 

These preparations help reduce the home loan burden off your shoulders. We have formulated this list of simple and doable home loan management tips to assist you in your home loan management. From managing your finances to keeping a good note on your liabilities, this list contains five pro tips that you must follow while you apply for a home loan

Pro Tips to Manage Your Home Loan

1. Finance Management 

The first and the foremost tip of all has to be proper management of your finances. When you get a loan, you are happier than ever, but at the same time, you have this burden of repayment in your mind. It would be advisable to start  looking for ways to ease down and make the repayment smoother from that very moment. 

This tip is all about managing how to add extra income and restricting unnecessary expenses to the extent possible. Start by creating  a list containing all your cash flows. Frame a proper plan of all the loan repayments you need to make and as your top priority.

Next, list out other expenses in the order of priority. For instance, paying rent would be more important than paying for a lavish dinner outside. Also list various additional income sources, including those of family members. This kind of planning will make the picture clearer, enabling you to manage your repayment and other necessary expenses.

 2. Search for Lower Interest Rates 

This tip is one of those preparations that will keep you from going deeper into the liability of the home loan repayment. While you scroll through the web and search for the best lenders, also look after the interest rates they offer. Home loan rates are one of those factors that impact your repayment directly. The interest rate you pay on loan depends on your credit score, so you must maintain excellent scores to get lower home loan interest rates.

Maintaining a low level of debt (less than 30%) at the time of home loan application and applying for the amount which is within the maximum you can avail is also a good way to negotiate lower rates. You can use a home loan eligibility calculator to estimate your maximum eligible amount. If you need a higher amount, add a family member with a stable income and good credit score as a co-applicant.

3. Be Religious with Your EMI’s 

Yes, your sincerity for your loan will be illustrated by your timely repayments. You can choose to go for either low or high EMI to repay your loan, depending on your financial situation at the time. However, it is advisable to go for high EMIs to reduce the burden of a higher interest payout and a longer tenure. 

Opting for a high EMI not only helps in the repayment of your loan faster as it reduces tenure. If you think you can go for high EMI’s and pay them regularly without straining or compromising other obligations, go for it. It will help you manage both your home loan and other commitments. 

4. Go for Partial Prepayments 

If your finances recently improved because of any fixed deposits getting matured or due to a bonus/promotion at work, then you can use this amount towards partial prepayment  of your loan. It will help you repay the loan quickly, and the tenure will also get reduced. 

Partial prepayments always help you pay off home loans faster. . As per the RBI’s recent guidelines, lenders will not charge prepayment fees towards part or full prepayment of property loans taken for non-business purposes. 

5. Calculate Liabilities 

Always use online tools to plan your loan. Tools like home loan EMI calculators will help you know the near exact amount you have to repay as EMI for a home loan for a given interest rate and tenure. You can then select a tenure according to your budget. You must also consider all the other liabilities if you have any, like any other personal loan or vehicle loan. 

With these calculators online, you can easily find the best amount and EMI for you. Remember that all your liabilities together must not exceed more than 50% of your income, else the lender may reject your loan. . Try curtailing your unnecessary fund outflow and invest them in fulfilling the obligations sooner. 

Read and understand these five tips to smoothly manage your home loan. Keep a note of the home loan rates, partial prepayment, and other applicable charges before confirming a loan. If you have not applied for a loan yet, plan your finances and improve your credit score. If you have a home loan as one of your commitments, follow these essential tips to reap out of the obligation at your earliest without going deeper into inability. Check the most suitable lender today!

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