Managing Home Loan Emis

Home Loan Emis

How to Manage Home Loan EMIs Like a Pro

Once you’ve secured a home loan—or have a plan in mind to purchase one soon—due emphasis should be laid on managing all the aspects of EMI payments (calculating the monthly EMI based on tenure and income, deciding on a fixed or a floating rate of interest) because that’ll determine how efficiently you can pay off the loan without hurting your budget or losing the property that you’ve put up as collateral.
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The lucrative offers on home loan might appeal to first-time loan seekers because they’re usually not told about the principal and interest components that are involved in a home loan process. To help you out with the repayment process, here’s how you can manage your online home loans better.


The Basics of Figuring Your Emi Online


  1. Do the Math


The home loan EMI is calculated on the monthly income you draw, after deducting all your expenses. Once you have a rough estimate of the amount you’ll be able to dedicate for repayment, the final conclusion on the total time taken to pay off the debt, and the interest payable to the bank can be drawn.


Lets see how to calculate home loan EmI with the help of a formula


EMI Calculator:- The EMI calculator helps you to calculate monthly installments for repayment.


Let's Know how EMI Calculator Works


E= P.r. (1+r)^

___________

[(1+r)^-1]


Where

E=EMI

P=Principal Loan Amount

r=Rate of interest calculated on a monthly basis

^=Tenor/duration of the loan


With the help of this formula you can easily calculate your home loan EMI ownself



Exhibit ‘A’: Lowering your EMIs


Say you decide to lower the EMIs because it’s a bit too much to handle considering your expenses. In that case, you’ll be paying more interest because the tenure increases.


Exhibit ‘B’: Increasing your EMIs


In this scenario, the tenure for repayment decreases because of the increase of the EMI amount. There are lots of EMI calculators online that can help you determine the monthly EMI if you plan on doing so.

In the end, you save up on interest charges which wouldn’t have been possible in the case above.



2. Making the Payments


Emphasis should be laid on making the payments and which of the two payment modes—manual or automatic—you’d opt for. Under the manual segment, you’re in charge of paying the EMI. Almost all money lenders offer this option on their online portals.


For those who do not fancy this mode, the automatic type will deduct the monthly EMIs directly

from your salaried/current bank account.


Apart from deciding on the EMI and the payments, here are a few other pointers to help you tackle home loan repayment efficiently:


  • Never Reduce the Emi at The Time Of Prepayment


A reduction of the EMI during prepayment to accommodate all your expenses only increases the interest you pay thereby escalating the overall cost of your mortgaged asset.


  • Opt for Home Loan Contingency Fund


A contingency fund is an isolated (backup) savings account with the sole purpose of collecting 3 or 6 months of EMI deposited by you. You must never utilise the money in this account as it will help pay the house loan EMI when you face a loss of income as a result of a sudden sickness/accident.


  • EMI Holiday to your Rescue


An EMI holiday is the duration given to you by your bank/lender when you cannot make the payments. Depending on your CIBIL score and repayment history, banks will allow you to take a vacation from paying the periodic instalments. The terms and conditions of this comfort will be set by the bank.


Management of house loan EMI can help you shave off hefty interest amounts and the money you save in the process can then be utilised to free your property from the mortgage. So stay sharp and start planning!

Author Bio

Arwind Sharma is a financial advisor with an experience of more than 7 years. He has worked for topmost financial firms in India and has been a visiting faculty at many reputed institutes in India. Currently based in Pune, Arwind Sharma is a name to reckon with when it comes to financial management for big brands. A post-graduate in business economics, he is an alumni of Princeton University, USA. During his free time, Arwind teaches children from marginalised sections of society and also work on his blog on photography. You can also find me on Google+.