Home ownership is a significant milestone for many of us, and obtaining a home loan is often the first step towards realizing this dream. However, managing your home loan EMIs can be challenging, especially if you're not careful with your finances.
With the right approach, it's possible to manage your home loan EMIs more efficiently, reduce your financial burden, and take control of your finances. In this blog, we will explore 4 tips that can help you manage your home loan EMIs better,
so you can enjoy the peace of mind that comes with owning your own home.
Smart ways to manage your home loan EMIs:
- Make frequent part payments to reduce the principal amount, and thereby the interest
- Try and lower the interest rate by opting for a balance transfer
- Increase the loan tenure to reduce the monthly EMI amount
- Get a co-applicant to split the EMI between two borrowers and reduce the financial burden
1. Make frequent part payments
Making frequent part payments can help reduce the principal amount and, in extension, the interest paid on the loan.
For example, if you have a home loan of ₹50 lakh at an interest rate of 8.5% for a tenure of 20 years, your EMI would be around ₹43,391. If you make a part payment
of ₹1 lakh every 6 months, you can reduce your loan tenure by around 4 years and save about ₹10 lakhs in interest payments.
2. Home Loan balance transfer
If you feel that your current home loan interest rate is too high, you can opt for a home loan balance transfer.
For example, if you have a home loan of ₹50 lakh at an interest rate of 9% for a tenure of 20 years, your EMI would be around ₹45,191. However, if you transfer your loan to a lender offering an interest rate of 8.5%, your EMI would reduce
to around ₹43,391, saving you around ₹5.5 lakh over the loan tenure.
Also Read: [ Home Loan and Mortgage Loans - What's the difference?]
3. Extend your Home Loan tenure
By extending the loan tenure, you can reduce the EMI amount, making it more manageable.
For example, if you have a home loan of ₹50 lakh at an interest rate of 8.5% for a tenure of 20 years, your EMI would be around ₹43,391. However, if you extend your loan tenure to 25 years, your EMI would reduce to around ₹39,695, making it
more affordable.
4. Opt for a co-applicant
A co-applicant can help in increasing loan eligibility and reducing the EMI amount.
For example, if you have a home loan requirement of ₹50 lakh and your income and credit score do not meet the lender's eligibility criteria, you can add a co-applicant who has a good credit score to increase your eligibility. This can help
reduce your EMI amount since both of you can pay the EMI together.
Bonus tip: Select the EMI date carefully
It is essential to select the EMI date carefully to ensure that you have sufficient funds in your account. For example, if your salary is credited on the 10th of every month, it is advisable to schedule your EMI on the 15th of the month to
ensure that you have sufficient funds in your account.
Conclusion
Managing your home loan EMIs can seem daunting, but with the right approach, it can become more manageable. By making frequent part payments, opting for a home loan balance transfer, extending your home loan tenure, going for a co-applicant
and selecting the EMI date carefully, you can significantly reduce your financial burden and enjoy the benefits of home ownership.
At Axis Bank, we understand the challenges of managing a home loan, and we are here to help you every step of the way. Our home loans come with flexible EMI options, competitive interest rates, and a range of other features that can make your
home-buying experience hassle-free.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
