Home loans are long term commitments with your lender and can cause a significant amount of stress. Before taking a loan of this nature, you must be completely sure that you can make the timely monthly payments. However, there is no reason to live in fear of the time frame. We have listed five methods by which you can save money while you repay your home loan:
- Take note of your CIBIL score and CIBIL report:
Your CIBIL score is very important and you must make sure that you have not availed of any credit at least six months ahead of applying for a home loan. All the details on your CIBIL report must be accurate; otherwise your home loan will get stuck on account of your CIBIL report. When your CIBIL score is 750 or higher, you can shop for a home loan.
- Read the fine print:
Make sure that when you are shopping for home loans, you study each and every aspect of it before committing yourself. With the holiday and festive seasons coming around the corner, it is quite common for banks and lenders to entice the customers with lower rates and impressive deals. Make sure that you understand these loans perfectly though, as many times, the lowered rates are only for a short duration. This should not put you off however, especially if you are confident about taking a home loan. Also make sure that you are aware of all the home loan features and the several fees and charges such as the processing fee, switching and pre-payment costs.
When the application for your loan is approved, you will be assigned a loan officer who will be your point of contact till you receive your first cheque or the amount is transferred into your bank account. While taking the advice of your loan officer is a good practice, do not take what they say as the last word. Do your own research and find out whether you have availed of every professional benefit and waive off as many charges as possible. Having a high CIBIL score would greatly increase your chances at negotiation.
- Make a higher down payment:
The fact that you are interested in a mortgage would entail that you have been saving money for quite some time till now. When making your down payment, try to make it as large as possible even if it means that you would be stretching yourself further than your means at the time. In the long run, this would mean smaller EMI payments.
- Pay the same EMI even if the interest rate is falling.
The central bank made quite a few heads turn by an untimely rate cut which would mean that anyone on a floating rate of interest would need to pay a lower EMI amount. While this chance to pay lesser every month is enticing, by paying the same amount of EMI as before you will be able to save money in the long run. This would also reduce the tenure of your home loan by 1 to 2 years.
A roof over your head is something that is desired by everyone but the idea of paying a home loan for the better part of your youth is a very daunting prospect. Managing your funds and cutting back on expenses is something that will no doubt become a necessity in these times, but by following the home loans hacks we have listed above, the burden and stress home loans place on you will be greatly reduced.