Are you someone who is thinking about your dream home but do not know how to go about getting it? The first step towards purchasing a house is arranging the finances. You might want to leverage your savings for buying a new home, but the savings might not suffice in most of the scenarios. Hence you might want to consider taking loans from the financial institution to achieve your objectives.
Home Loans – Managing your EMIs
If you have decided to avail financing from external sources, home loan from trusted financial institutions is an excellent approach. However, availing such loans is a greater responsibility, and you need to plan your repayment phase carefully. Here’s how you should manage your loan EMIs:
Opting for short tenure:
A short tenure might result in a higher EMI but for a relatively lesser interest rate. In other words, you should try to select an optimal tenure which does not hurt your repayment but at the same time, makes your home loan interest rates shorter.
Holistically, you can reduce your financial burden by choosing a shorter tenure. Assuming that you decide to purchase a home in your 30s, you might want to think about your retirement planning as well. Hence by choosing a shorter tenure, you can allocate a significant amount for your retirement funding as well thus securing your future.
Smart financial management:
If you have selected a home loan, you should be good at money management as your repayment phase is longer. In case you have other loans, you should strive to close them as soon as possible so that your repayment phase is more comfortable. It would help if you also opted for low-risk investments that might provide surplus funds in the long run, which you can use to pre-close your home loans.
For example, a five year FD can offer you higher returns which you can invest in another long term investment, a 15-year PPF. Upon maturity, the amount can be used for the pre-closure of your loan or to manage any other expenses. In a nutshell, the objective is to increase returns and reduce financial burden. Interestingly, top financial institutions do not levy penalty charges for the pre-closure of the loans, thus encouraging you to manage your finances well.
Monitor the market for low-interest rates:
When it comes to choosing a lender to avail a home loan, the options are countless. Note that choosing your lender is a long term commitment, and you need to be cautious about the same. You need to select the bank/NBFC, which offers the best home loan interest rates so that you can manage your finances well. In case, you want to shift to a lender which provides better interest rates; there is a provision for that as well. Hence you need to monitor the market keenly for your benefit.
With a lot of research, you can easily select a lending institution which helps you to buy your dream home and achieve your objectives.