- Repay your credit card debts
- Reduce your Interest Burden While Repaying Home Loan
Each month, pay off your credit card balance in full by the due date.
For millions of people, owning a house is a dream come true. However, before booking a home, it is advisable to devise a strategy for reducing your burden when repaying your home loan. The EMI, the rate of interest (ROI), and the tenure all play important roles in home loan repayment. If these are not considered, a borrower will face an unfair repayment burden. Here are three strategies for reducing home loan debt for first-time buyers.
Prepayment is an easy way to reduce the burden of a home loan. Borrowers of home loans will save interest if prepayment starts in the first year of the loan. Prepaying a home loan at a later point does not save much interest. It should be remembered that there are no prepayment penalties on home loans with floating interest rates. Furthermore, the prepayment number should be equal to at least two EMIs.
Pay a greater down payment – The Reserve Bank of India determines the minimum percentage of down payment needed to secure a loan. The interest rate is then measured as a percentage of the amount that remains. As a result, putting down more money upfront would result in a lower EMI to be paid in subsequent years.
Make the payments on time. Before you agree to a home loan, you should be aware of its implications. Failure to pay the dues on time can only contribute to bigger issues in the future. The principal sum can remain the same, but interest may continue to accrue throughout periods of nonpayment. So, if you can maintain a lower rate of interest paid on the principal amount of the loan, it is a good practice to make daily payments or even pre-payments.