Taking a home loan helps you to fulfill the long pending dream of owning a space which you can call as your own house. With the home loan amount, getting a house becomes very easy. But what you must also be ready for is the monthly EMI which you have to pay until the loan tenure ends. The monthly EMI might take up more than half of your earnings and hence might affect your future planning. Hence it is very important that you plan well in advance so that you can not only repay your home loan but also work on savings and investments.
Monthly Income – This factor determines how much EMI you will pay each month. Your monthly income helps the banks in understanding if you can repay the home loan. Hence you must plan the EMI mount in such a way that you are not affected without our daily expenses and savings. Efficient planning of EMI amount will help you in reducing your loan burden.
In the starting years, you can opt for a higher EMI amount as salaries in the private sector usually get a hike each year. Hence after a certain period of years, you will have a considerable hike on salary and the EMI amount will be lower when compared to your salary.
Monthly expenses – The next important factor you need to focus on is your monthly expenses. Budgeting will play an important role in this. Having a plan in place will help you in paying the EMI amount without any worry. Focusing on paying off the bills first and your EMI is of prime importance. The remaining amount can be used for maintaining a contingency fund or for expenses.
Loan Tenure – You can plan in advance if you need the loan tenure to be short or long. Planning a longer tenure helps you in reducing the EMI amount which will reduce the burden on your salary. Planning a shorter tenure will help you in saving a lot of interest money which you will end up paying in a longer tenure. Hence plan accordingly as per your needs and income level.
Loan Interest Rates – Last but not the least, you also must check and compare loan interest rates. Even a small change of 0.25% in the interest rate will help you in saving a lot of interest money and you will repay a lesser loan amount. Comparing different lender options is important in order to get the best deal. Hence negotiate well with your lender so you can save the best for the future.