Hyderabad: With interest rates soaring, many people are thinking of wrapping up their housing loans. Whereas, new borrowers have to carry this burden for a long time. Hence, if you focus on certain aspects, you could be debt-free sooner than later. We all tend to rejoice when interest rates are low. But, we are a bit worried when rates are shooting up. In fact, interest rates fluctuate on the basis of inflation.
A home loan is a long-term commitment of 15 to 20 years. During this tenure, we could see the rise and fall of interest rates many a time. So, better avoid looking at these fluctuations in a negative light. Because even if the interest rate rises, it will not impact your EMIs. It will also not dent your monthly budget. Only your term will get expanded. When interest rates hit a downslide, the term will automatically get adjusted.
Remit on time...
Ensure remittance of EMIs on loan in time. Otherwise, you have to cough up late fees and it will turn into an unwarranted burden. Apart from it, your credit score takes a beating. In such a scenario, availing of a new loan would cost you more. It is better to keep money enough for 3 EMIs in your bank account to be on the safer side.
Also read:EMIs to rise as RBI hikes interest rate again
For low interest...
Also, try to move from banks charging high interest to a bank that demands less. The key point here is that it should be at least 50 basis points lesser. Only then, it will cut the burden in the long run. After taking the loan, your salary could increase and even your credit score could sound better, then showcase the same to your bank. Also, hint at moving to another bank, then the existing bank could respond positively.
Premature closure...
To ensure that the term is not extended, pay up the principal amount in parts whenever you have excess money. Also, try to remit extra EMI every year, whereas bonuses and other sources of income can also be utilised to clear the loan amount. At least, if you remit 5% of your loan amount every year, you could save well on the interest component and wriggle out of the loan commitment at the earliest.
Hiking the EMI...
Actually, your EMI should not exceed 30 to 40% of your monthly income. If your income goes up, just check whether you can seek a hike in EMI. Ensure that, it doesn't dent your monthly budget, which is a very important factor. A hike in EMI could also come in handy when interest rates rise and also in wrapping up loan amounts quickly.
