Everyone dreams of having their own house. But, sometimes financial constraints come in the way of this dream. The easiest way to deal with this is home loan. In this, a large amount of money is taken as a loan from the bank to buy a house and then it is repaid every month in installments (EMI) along with interest. Since the home loan amount is quite large, it also involves many types of risks. If you keep some basic things in mind before taking a loan, you can avoid many unwanted problems.
How is your financial situation?
If you are going to take a home loan, then consider your financial situation. Calculate whether you will be able to pay the EMI after meeting your essential expenses or not. A down payment is also an important aspect of a home loan, attention should also be paid to it. The most important thing is that you should have a good amount of savings after a down payment so that you can deal with sudden problems.
What documents will be required for the loan?
Income statement, salary slip, Form 16, bank statement, latest IT return, age proof, address proof, photo identity card, and property documents should be ready for a home loan. This increases the chances of getting the loan approved quickly. Your credit score should also be good.
You should also check the hidden cost of the loan so that there is no problem later. These include things like legal fees, technical valuation charges, franking fees, and documentation fees.
What should be the tenure of a home loan?
Usually, an amount of lakhs is taken as a loan in a home loan. It is not easy for a middle-class person to settle such a huge amount in 4-5 years. This is the reason why most people keep the tenure of home loans for 15 to 20 years or sometimes even more. This reduces the EMI amount, but you remain stressed about repaying the loan for a longer time.
Especially, this problem is especially serious for the middle class and working people, because suddenly any big problem can worsen their financial condition. In such a situation, you should try to repay the home loan as soon as possible at your convenience.
How to reduce home loan EMI?
The higher the loan amount, the longer will be your EMI period and the more interest you will have to pay. If you try to finish the loan in a shorter period, you will have to pay higher EMIs every month, which is difficult for most people.
In such a situation, more down payment should be made before buying a house. At least a 25 percent down payment should be made and 75 percent of the amount should be taken as a loan. For example, if you are buying a house worth Rs 40 lakh, then make a down payment of Rs 10 lakh and make the remaining installment of Rs 30 lakh. With this, you can increase or decrease the loan repayment period and EMI at your convenience.
How to reduce home loan tenure?
If you have to finish the home loan in a short time, you can opt for pre-payment. Whenever you get extra money, use it for prepayment of a home loan. This will reduce the principal amount of your loan and can reduce both your loan tenure and EMI. This will be a big profitable deal for you. By reducing the loan tenure, your tension will reduce and you will also have to pay less interest to the bank.
What is the benefit of increasing EMI?
If you increase the EMI after taking a home loan, then you can relieve the debt burden quickly. If you get a good increment or promotion, or get a good package after changing jobs, then you can increase your EMI. Many banks give the option to revise the installment every year. If your salary has increased, you can take advantage of this to repay your home loan early.
PC Social media
