To own the house, people prefer ‘Home Loan’ as financial aid. Younger age people should give the preference to home loan so that they can repay the whole installments before retirement. As quickly you will repay the home loan that fast you will be free of burden.
A quick and healthy repayment of a home loan is vital for generating a healthy credit score. There are various options to repay a loan. Home Loan EMI is one method to repay the loan. EMI is Equated Monthly Instalment; it is a set of the principal loan amount and interest on the loan amount. The total loan amount including the interest is divided monthly. The lender of the loan fixes a date for every month.
The payer has to pay the fixed amount every month on the same date until the whole amount is paid. During the initial years, the interest percent is higher on the monthly EMIs, but in the later years; the percent on the principal amount becomes higher.
The applicants may choose from three different ways of repayment with the lendercompany offering the home loans to reduce the burden of Home loan EMI. They are:
- First, the applicant can choose to pay a higher amount of principal loan amount to repay the loan faster. It decreases the cost of the loan as it brings down the interest rates.
- Second, the applicant can offer to pay one-time partial prepayment of the loan; it reduces the principal loan amount burden plus the interest rates on the principal amount.
- The applicants may choose to increase the amount of monthly EMI of their home loans if their income has increased. It decreases the burden of repayment of the loan.
EMI helps in Finance planning:
As you get a fixed amount to pay every month, EMI helps you plan your finance.
- Your financial goal is to lose your burden of EMI, it puts you on a tight budget and lets you design your finance for future.
- Emergencies can come on your way anytime, unannounced. Therefore you must have a surplus to pay your EMI.
- Before going for Home Loan on EMI make sure that your EMI is not more than 40% of your monthly income.
As we mentioned earlier, timely payment of home loan repayment is vital for the healthy credit score. Credit Score helps you in getting better deals for future loans. Hence, you must be the regular payer of your loan, as committed to the lender. If you are looking to improve your credit score, which is a fundamental factor to ensure that you get the correct loans, then you must also take advice from a financial consultant.
On the other hand, if you are facing difficulties with the repayment of the home loan & Before applying to calculate your Home Loan Eligibility. do not take another loan to help solve that as this is one of the most common mistakes which people do. Instead, try to keep further streams of revenue as Plan B if the primary source of income does not work out. It is always recommended to plan the process of repayment thoroughly before committing to a loan.