Home loan is a long-term financial commitment that can go up to 20 years. Besides the 10%-25% down payment, you must make regular EMI repayments too. However, before loan disbursal, charges like legal, processing, technical and stamp duty fees are incurred. After the loan disbursal, fees like switching expenses, and duplicate statement charge may crop up. If you availed of floating housing loan interest rate, ensure to plan for any possible rise in rates in advance. A well-designed financial plan can help you come out of your home loan debt in a comfortable way. Note that initially, you must use the home loan EMI calculator. Through this calculator, you can figure out a suitable EMI based on your repayment capacity.
Financial planning in case of a couple
Home loan availed jointly increases your credibility. Also, it enhances your home loan eligibility and makes you eligible for a bigger loan amount. Thus, if your spouse is working, opting for a joint home loan is a good way to avail and repay your loan faster. In the event of a joint home loan, each co-borrower can also claim tax benefit on the principal constituent of the EMIs. The maximum deduction permitted is Rs. 1.50 lakh p.a. Also, each can get an additional tax deduction of Rs. 2 lakh on interest payments.
Hence, you must consider adding a co-borrower and must factor in your financial commitments, lifestyle, and repayment capacity while deciding your loan amount. Note that adding your spouse can cater to income stability in events of financial crisis such as income loss of one of the home loan co-borrowers.
Regular saving habits, after factoring in your EMI and regular monthly expenditures, can serve as a crucial safety net. During high interest periods, the accumulated fund can be utilised for your loan part-prepayment to lower your EMI burden.
Financial planning in case of an individual
With the liability of loan repayment completely on your shoulders, you as an individual borrower must clear the home loan by the due date without fail. As home is a cherished asset, you must ensure to repay your home loan much before the repayment tenure. In case your existing home loan interest rate is on the higher end, consider opting for a home loan balance transfer. Choosing the balance transfer option will help you avail of a lower housing loan interest rate.
You must not avail of new loans till you repay your existing ones. Too many loans and credit cards can guzzle your disposable income faster. Stretching your finances to meet your unnecessary expenses may propel you to default on your home loan EMIs.
Hence, you must not indulge in any new loan and concentrate on repaying your home loan first. Ensure to prepay your home loan whenever you avail of any surplus funds to lower your home loan liability.
Ending note
Following the above-mentioned financial steps can help you meet your home loan EMIs with ease. Also, before you apply for a home loan, ensure to keep handy certain important documents. Documents required for a home loan include identity proof, income proof, residential proof, age proof, signature proof, educational qualification, etc.
