While availing a home loan, a substantial amount goes towards servicing EMIs to repay the loan. A home loan EMI is calculated with respect to the principal amount borrowed, tenor and interest rate. To facilitate ease of EMI payment, individuals need to initiate strategic financial planning.
Following are some of the tips that borrowers can try to ease out the EMI payment.
- Opt for a bigger down payment
Individuals can slash down the EMI component of a housing loan by making a lump sum down payment. By making a higher down payment, one can lower the principal amount borrowed and consequently lower the repayment liability.
- Pre-pay frequently
Another best way to lower the housing loan EMI burden is by opting for pre-payment as and when you can. In this regard, you can use the bonuses, incentives, maturity income from any mutual fund or life insurance, etc., to make an additional payment over the designated EMI amount.
If you pay a lump sum amount, it will automatically lower the subsequent EMIs. Nonetheless, it is crucial to ensure that the lender does not levy any prepayment charges before opting for the same.
- Use an EMI calculator
Individuals can also use a home loan EMI calculator to estimate the amount they will need to repay each month before applying for this credit. Using this tool, they can also derive the interest payable and total cost of borrowing at the tenor’s end.
Almost all reputed financial institutions offer this tool online to use for free.
- Check amortisation schedule
Borrowers also need to check the amortisation schedule of their loan. It will help them to make a repayment plan that suits their financial capacity the best. This schedule shows all the components of a loan, including home loan interest.
Individuals can follow these simple tips to make their home loan EMI payment comfortable.
