Plan finances, assemble home loan repayment easier

Are you searching for a lender who is willing to lend you at affordable rates

? Not all borrowers are well-equipped to manage their home loan debts.

Before you shoulder this huge financial commitment, prospective homeowners must practice financial discipline. Failing this, the borrower must endure the pain of defaulting and losing his roof.

Here are a few points to help you manage your debts:

Identify your spending pattern and expenses. This could include your monthly expenses like housing, food, healthcare, insurance, transport , entertainment, education , emergency needs and other debts. The difference between your monthly income and fixed expenses would give you the surplus money available with you every month.

Borrow as much as needed

Borrow only as much as you can comfortably repay. As a thumb rule, your monthly EMI should not be more than 30 to 40 percent of your regular income. Borrowers may find it difficult to set aside more than this amount towards a housing loan alone every month.

Do not borrow more than you actually need just because the rates are low. Home Loan Interest rates tend to fluctuate , especially in case of floating rate loans. An increase in rates would translate into larger EMIs due to the lender.

It is advisable for borrowers to set aside some money every month. For borrowers treading on a tight budget, temporary job loss or a hike in interest rates could mean disaster.

In these critical times, the borrowers can rely on the buffer savings that they had accrued.

Arrange for margin money

Banks only lend 80 to 90 percent of the cost of the home. The borrower must make arrangements for the rest of the money. This is also called down payment for the loan.

Some borrowers may plan to take a personal loan or loan against property to ease their financial position. It is wiser to avoid expenses till you clear off the burden of the home loan debt. More debts become difficult to manage especially in times of escalating costs and economic uncertainties.

Select the right lender

Select the lender based on the money the lender is willing to sanction you, interest rate, additional cost of the home loan, penalties, customer service levels, feedback from existing customers and how frequently the lender has passed on rate hikes to the borrowers.

A home loan is a long-term financial commitment. Ensure that it is not stressful to repay your home loan debt.

Plan finances, assemble home loan repayment easier

By: Bhavana Jhingan

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