How to plan the monthly installment for your home loans?

Planning to take a home loan to buy your new home? If yes, you should be aware that you need to repay the money in the form of EMIs (Equated Monthly Installment) to the lenders and it impacts your monthly income for a longer period of time. Therefore, you should carefully choose your interest rates and maintain a strategic distance between your loan repayment and financial life.  People take the loan because they don't have sufficient funds handy available to purchase the house with full cash. One must take a loan based on the tenure and their repayment capability. There are online EMI calculators that will help you calculate your exact EMI over the span of time you opt for loan repayment. This way it helps you to be prepared towards monthly installment, do the adjustment and savings and manage your finances properly.

While planning your monthly installment you should cut down the unnecessary expenses so that you comfortably arrange for it. If you don't plan your repayment it might derail your finance else, if default on repayment continuously anywhere in between then the dire consequence would be they would seize your property. Thus, it becomes imperative to plan the monthly installment for your home loans. While planning there are a plethora of things to consider on repaying the EMIs and here are few things to consider carefully:

Job Stability

The stability of your income plays an important role to determine EMI over the course of time. When your income is stable and from thereon increased you can pay higher EMI amount. Your job increment, incentives can be diverted towards paying up the EMIs. Ensure the EMIs not affect your regular household expenditure as well. Ideally, housing finance companies or banks will carefully evaluate your income to debt ratio to decide your EMIs and they would consider 40-45% of your income towards your monthly installments.

Consider your expenditure

EMIs need to be repaid within a specific time. Therefore, decide by considering all your existing and near future expenditures in mind. Regular expenditures like medical bills, school fees, personal and lifestyle expenses have to be taken into consideration before you plan for your home loan EMI. Unwanted expenses might demand the money you have saved for EMIs. But you have to carefully maintain the balance and always stay prepared to switch swiftly so that it doesn't impact your monthly EMIs

Interest rates

The interest rate you choose will definitely make a huge impact on your monthly installment. The home loans with fixed interest rates are considerably higher compared to floating rate basis home loans in india. It all depends upon your income stability and risk capacity on which type of interest rate you would prefer to choose. In case you opt for floating basis remember the EMIs will also vary over the span of time. You can say it's your sheer luck if you pay a lesser monthly installment for a particular period of time. But then on an average, you can save for the days when interest rate might shoot up.

 Age

Your age will have a greater impact on your loan EMI. Suppose you're in the late 20s then it's possible you can pay more EMI amount. That's because you're free from any form of family responsibility or debt and you can divert more funds towards home loan EMI.  On the other hand,  it would not go swiftly post 30-35 years when you're married and stuck with other financial responsibility.  Therefore, the earlier you opt for loan better it would be evenly spread your monthly installments.

Credit Score

Your credit score will play important role in deciding the interest rates and thereby lead to further choose a comfortable EMI amount. Therefore, experts say to maintain a healthy credit score of around 750+ and then opt for a Apnapaisa home loans. You can try and negotiate with the lenders to for low interest rate deals and it will save a lot in the long run.

Divert Tax savings towards EMIs

Tax benefits on home loans are provided under section 24, section 80C and section 80EE of Income Tax Act, 1961. You can avail a maximum of Rs 1,50,000 on the principal amount u/s 80C, up to Rs 2 lakh on interest rate u/s 24(b) and 50K u/s 80 EE for property not exceeding 50L. So, you can definitely divert these funds to comfortable EMI payments.

About This Author

Anushka Kapoor ApnaPaisa helps you get the best financial solutions Joined: March 12th, 2019