Smart ways to manage home

loans

Index

• Introduction• Partial Pre-Payment• Switching to Lower rate• Increasing the EMI• Summary

Introduction

Many of us face the problem in managing to pay interest for our home loans.Here are some really good solutions to answer all your queries.

Hey I have been figuring out how to manage my home loan ?

Why is everyone asking the

same question ?

Partial Pre-Payment

• This is the easiest way to close a housing loan faster• The effect is that the one-time payments help to reduce the principal

balance in the loan. And when the EMIs continue, they have lesser of the principal to cover. So the same EMIs need a lesser time to close the loan. More earlier and more frequently the partial pre-payments happen the faster the loans close.• Banks generally allow partial pre-payment starting from Rs.10,000/-.

There are no charges for partial pre-payment or even full prepayment of housing loans currently.

Switching to Lower Rate

• The interest rates current are in a rising trend. There are times when the interest rates start going down too like NOW! Based on the interest rate reset period, different banks will reduce their rates at different times. If the reset interest band of your lender is a wider band, you may be at a higher interest rate for a long time after other banks have started to reduce their rates.• Switching to a lower interest rate will shave off a few years from your

housing loan. Care however has to be taken about not jumping too many times or with low interest rate differences. A heartening detail though is the removal of prepayment penalty. This can definitely boost the prospects of a home loan switch easing the cost burden for the loan borrower further!

Increasing the EMI

• This is another option to close the loan faster. If you can spare a portion of an increment to increase the EMI, considerable saving could be made. For example a Rs.30,00,000/- loan for 20 years will need an EMI of Rs.28,950/-. If you can spare an additional Rs.2,300/- per month, the loan can be closed in 15 years itself.• The EMI can also be increased by making use of money that was going

into an endowment insurance plan or a recurring deposit in a post office.• Increasing the EMI can be done at any point during the tenure of the

loan. There are generally no charges for increasing the EMI.

Summary

Only after closing the home loan does one really become the owner of the house. Closing the loan as soon as possible not only relieves the mental strain of carrying a debt but also releases more money into the family budget.

Hope I am able to convey you apt solutions ?

Thanks a lot !