In recent years, due to lower interest rates on home loans rates, as well as favorable markets, more and more people are inclined to take out these credit cards. However, borrowing money is also a responsibility to repay it within the specified time.
Making sure you pay your EMIs on time helps reduce the risk of penalty and maintain a good scores on credit and affects your credit score positively. However, a large percentage of people fall behind on payments every year.
To avoid a similar scenario, pay your the regular EMI payments by observing these suggestions below.
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Tips to make the EMIs on your mortgage quicker
Here are the top six suggestions you can follow to handle your mortgage EMI in a more efficient manner.
Get a loan that you are able to manage
Before you submit an application for a mortgage on your home be sure to evaluate the loan’s affordability. To assess the loan’s affordability it is essential to consider your FOIR. This is the term used to describe your fixed obligations according to the income rate. It is important to ensure that your FOIR is between 40 and 50% so that you handle your mortgage EMI payments easily.
Make pre-payments
You can pre-pay the amount of your loan and reduce the amount of interest you pay payout. But, you’ll need ensure that the institution you are borrowing from doesn’t impose any penalties or charges for prepayment. These fees can raise the costs of borrowing.
Find lower interest rate deals
Always check the rates of interest offered by different financial institutions. Sometimes lenders offer lower interest rates for home loans. Consider the balance transfer option and transfer your current amount of your home loan to the lender with lower rates. This is a great way of cutting down on your EMIs.
Make use of your home EMI calculator
Home loans are accompanied by substantial interest as well as EMI payments. This is the reason why, when you seek an loan, understanding interest and monthly payments is vital. This home EMI calculator can help you plan your overall financial situation in a more efficient and effective method. Then, calculate your monthly instalment amount in order to manage your debt.
The top financial lenders also offer pre-approved deals that make credit applications such as home loans and loans against properties faster. Make sure you are pre-approved by giving your contact information and name.
Select a tenor that is longer
A longer tenor will mean that the repayment obligation is spread over a long time. This will allow you to reduce your EMIs. But, choosing an extended tenor will mean that your total interest expense will be greater, and your financial institution could charge higher interest on home loans rates.
Follow these steps to make sure you avoid the risk of legal penalties of not paying your home loan on time.
Legal consequences for a default on a mortgage
If you do not keep up with the regular EMI repayments, you will have to bear adverse consequences. These include:
- The lender or bank could be able to charge an additional cost.
- It could have a negative effect of your credit rating.
- The lender may initiate legal proceedings against you or even take your property.
Home loan interest rates could fluctuate at times. That’s why borrowers should be careful when it comes to EMI payments and make sure that they pay off their loans in time to avoid putting more pressure on their finances.
The amount to be paid back on a home loan can take between 18 and 30 years, resulting in an extremely long process. If you don’t plan and prepare properly it could be a challenge to ensure a successful financial management and pay off the home loan EMIs in time. The suggestions above is extremely beneficial to pay back the EMIs without taking financial risk.
