About Home Loan EMI
The feeling of buying a house of your dreams can not be expressed, but home loan has now made it possible to make that dream come true. However, this dream comes with the payment of hefty money as the down payment, as well as Equated Monthly Installments or EMIs.
When you go for a loan, remember that banks grant loan on the basis of the net take home pay. Hence plan out for the loan you go for so that it does not come as oblivious outcome.
In case you have been granted a Home Loan with the EMI’s that you find tedious to pay, here are some notes to meet your EMIs in a better way and plan your cash flows such that EMIs are managed.
1) Streamlining a process:
You can start off by analyzing your income and expenditure. Analyse and research in areas where you can cut expenses, especially in the discretionary areas.
For example, if you find out that you have high expenditure on food that can be controlled by minimizing the outings, just do it.
2) Creating a separate account for loan and savings:
If you have a separate account for servicing the Loan and for savings, you can route all expenses; it becomes challenging to keep a record of the various debits in the account. Moreover, if you and your spouse are working then there exists income credits in both the salary accounts. Take a joint conclusion beforehand on the account heads.
For illustration, it becomes more disciplined and easier to control expenses when you want to pay all the utility bills and household expenses from your account whilst your spouse’s income can be used for meeting lifestyle costs. This might result in an effective result.
3) Maintaining a contingency fund:
In the case of emergencies, maintaining a contingency fund would help you pay your EMIs. Remember that you have been granted a home loan with the trust of servicing the loan effectively.
If you are unable to pay your home loan EMI on time, it would result in a failure and mark you as a defaulter and as a consequence it will cause a dip in your credit score. Commence this corpus slowly in small installments when you begin your home loan.
4) Consider Your Options, in Dialogue with Your Lender:
Can the bank repossess your asset? Legally, the is positive. But there are a couple of reasons why you don’t have to worry about this. You can opt the options like:
A) Refinancing your loan: There might come a time when home loan EMI rises due to an increase in overall interest rates, or any other personal matter then bank can do a restructured by introducing various offers.
B) Deferring Your Payments: In the case of not paying at all and there exists a condition that your situation might change because of a new job or any legal cash inflow then you can approach the bank for deferral of your payments. The bank will look at this case and grant support, giving you a pane of opportunity to seek ways to increase your cash flows.