Manage Home Loans

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Smart ways to manage home loans
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Index

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

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Introduction
Why is everyone asking the same question ?

• 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 ?
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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.

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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!

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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.

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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 !
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