Home Loan EMIs – Five Ways To Maintain And Repay In The Best Way

Home loan EMIs are a big part of your life once you buy your home with a housing loan. A borrower can spend as many as 20 to 30 years of his life repaying home loan EMIs and thus it is very important to do it the right way.

A home loan EMI calculator is essential for anyone who is seeking a home loan. You should be well informed about your EMIs so that you can prepare yourself for this expense every month. Missing even a single home loan EMI can have bad repercussions on your credit score.

Here are some tips on how to manage your EMI payments like a pro.

1. Schedule your EMIs wisely: Always schedule your EMI payment close to when you get your salary credited to your account. That way you can ensure that you always have sufficient funds when the time pay comes. Just like failure to pay your EMIs can reduce your CIBIL score, paying EMIs on time can boost your creditworthiness.
2. Use extra money to repay your loan: If you happen to come into any money, for example if your inherit money or get an insurance pay out or even receive bonuses or a large increment, use that money to repay your loan instead of putting it in savings. This way you can begin your repayment of home loan and even reduce tenure.
3. Choose higher home loan EMIs: Choose higher home loan EMIs for a short period rather than lower home loan EMIs for long period. You may think that a higher EMI is an added expense, but when you pay lower EMIs for a longer period, you end up paying more interest. With higher EMIs you can pay off your loan faster and pay less in interest as well.
4. Income and debt ratio: Always maintain your income and debt ratio. This means that if your income increases, increase your home loan EMIs as well. This will not only help you repay your home loan faster, but will also help in saving more in terms of home loan interest.
5. Pay an extra EMI every year: This may be a struggle at first, but can help you in the long run. If your home loan EMI is 36,000 INR then try to save 3,000 every month and then use that saving to pay an extra EMI at the end of the year.

4 Things That will help you Pay your Home Loan even During Financial Crisis

What happens if a borrower is unable to pay his/her home loan EMI? This is a question that arises in the mind of every home loan seeker, but they’re too afraid to know the answer. Getting a home loan is a big step in everyone’s life. But what if, due an unforeseeable circumstance you find yourself in the middle of a financial crisis and are unable to pay your home loan EMIs? Will you immediately be termed as a loan defaulter? The answer is no. The process of becoming a defaulter is a long one. If a borrower is unable to pay his or her home loan instalment once, due to an unforeseeable expense or a financial emergency, the bank will not immediately term him or her as a defaulter. If you miss one EMI the most a bank can do is send you a reminder mail regarding the same. The bank may also call the borrower to ask about when the payment will be made.

The trouble begins if a Home Loan borrower fails to pay his EMI three months in a row. The bank will send him/her, a number of reminder mails and finally a legal notice. This is when the borrower is termed as a loan defaulter. The term can severely affect one’s CIBIL score, making it difficult for them to borrow in the future. If the borrower fails to respond to all of these notices and calls and still fails to clear his/her dues, the bank will send an officer to their residence to affix a notice on their door or even print a notice in the newspaper. In three months after this, the bank will declare the property as a non-performing asset. In two months after that, the bank will take possession of the property and if the borrower fails to clear his dues in six months the bank will auction it off.

No one wants to be in this situation, but the future is a tricky thing and the only thing you can do to arm yourself for whatever it throws at you is to be prepared. Here’s how you should handle your Home Loan EMIs while going through a financial crisis.

1.  Get in touch with bank and inform them about your problems, they may be able to give you some leeway or at least wave off the late charges on your EMI.

2.   Re-negotiate your loan by increasing the tenure, so you can pay smaller EMIs.

3.  Get home loan insurance in advance, so you don’t need to worry about your loan repayment.  

4.  Spend wisely, keep track of all your expenses, avoid unnecessary expenses and save up to pay your EMIs.

How to calculate your Home Loan EMI

A big part of getting a home loan is the EMIs that you have to pay for years and years afterwards. Equated Monthly Installment, also known as EMI is the part payment that you have to make to your lender bank every month. Your EMI consists of a part of the principal amount, plus the agreed rate of interest on your loan. The bank gives you a statement, stating the amount to be paid as your EMI; a lot of people do not know how to calculate EMI on their loans. There is no special home loan EMI calculator that tells you how much you have to pay every month. As a result they often feel that their banks are overcharging them.

If you’re one of those people then don’t worry, we’re here to tell you how to calculate your EMI with ease. Let’s take the example of Mr.X, who took a house loan for Rs. 5 lacs for a period of ten years, at the rate of 10.5%. He pays a monthly EMI of Rs 6,747. The bank calculates this EMI for him, and he feels he’s cheated. Here is an easy way for Mr.X to calculate his EMI.

The easiest way is to use a mathematical formula that has been derived to calculate EMIs. The formula reads, EMI = [P x R x (1+R)^N]/[(1+R)^N-1]. The P stands for the principal amount of your loan, R is the interest rate per month and N is the number of monthly installments to be paid.

Another way to calculate home loan EMI is with the help of Microsoft Excel Sheets. The formula used here is called the PMT. For this formula you need three variables, the rate of interest, the number of periods (nper) and the value of the loan. This formula is used universally for this purpose and when in doubt you can use it to calculate your own EMI. There isn’t any scope for error since it’s all done by a computer, which acts as your home loan EMI calculator.

So the next time you have to make an EMI payment, just use these formulas and you should be sorted.  

Learn the many benefits of purchasing a property

Property investments are one of the most lucrative financial assets owned by an individual. It is also the largest or the major component of financial investment in one’s entire lifetime. If you have already purchased a home loan or am planning to invest in one, then read along these basic guidelines for a clear insight into property investments and house loans specifically.

Credit Score: Banks pull a substantial amount of finance when lending loan amount to the lender. Hence, it is important for the individual to own a good credit score to claim the loan without any hassle.

Mortgage Amount: Before applying for a home loan for a specific property is to look out for home loan eligibility by checking your eligibility using a home loan emi calculator. Understand your debt-to-income ratio. It is advised to have a debt-to-income ratio below the 50% mark to have your loan approved without any delay or disapproval.

Funding your dream home in the right way: If you intend to live at your home for 5 years or more then the safest and best considered bet is to apply for a 30-year fixed rate mortgage

Second Mortgage Options: A second mortgage lets you borrow against the value of your home. It is best advised to consult a financial advisor before taking any financial decision to help save finances in a smart way.

For those with low down payment finances: It’s possible to claim mortgage without the 10-20% down payment mark. Again, seek financial advice for your home loan and get familiar with these mortgage programs that lets you take mortgage on very little down payment

It's possible to get a mortgage without a 10%-20% down payment. Even today, people get a mortgage with no money down. There are a few legitimate programs allowing you to get a mortgage with very little down. Get acquainted with some of the safer mortgage programs out there.

Apart from these, it is advised to not quit your job and have a steady income. Make sure you have enough funds to pay your monthly basic expenditures and debts as you loan them. Pay your bills on time. Keep bank accounts in handy. Before applying for a home loan, compare different banking institutes and their terms and conditions levied while applying for a home loan to get better financial benefits. Make use of a home loan emi calculator to learn about your monthly EMI for the property you wish to buy.

Know the Significance of Home Loan EMI Calculator

Home Loan EMI is the month to month repayment that borrower ought to make to repay the home loan according to amortization schedule. Now, what is Home Loan Amortization Schedule? Home Loan Amortization Schedule is the table, which contains outstanding balance before installment of each EMI, Contribution towards main reimbursement, Contribution towards interest installment and outstanding balance after installment of each EMI. One of the most effective tools for understanding the interest rates and EMI charged is the housing loan EMI calculator.

How is the borrowed amount and interest due paid through EMIs?

Each EMI reimburses a piece of central i.e. the acquired sum and the enthusiasm due on the obtained sum. The extent of each EMI used for reimbursement of foremost and interest, be that as it may, shifts after some time.

Banks and money related establishments, as a rule, ascertain EMI through a typical numerical equation. Accordingly, for a given advance sum, residency and loan fee, the EMI ascertained and the amortization plan offered by banks and Non-Banking Financial Companies (NBFCs) will commonly be comparative. This implies example of diminishment of foremost sum through installment of each EMI will commonly take after comparative pattern over every finance related organization.

The underlying EMIs contribute more towards installment of interest due when compared with the principle borrowed amount. In any case, amid the residency of the advance, ensuing EMIs contribute more towards repayment of the borrowed amount when compared with past EMIs.

What's the advantage of ascertaining Home Loan EMI calculator?

Since EMI is the settled sum that you should pay to the bank towards the total repayment of your Loan, figuring the EMI helps you to arrange your month to month spending plan.

What is the effect of part installments on EMI?

Part installments diminish the outstanding balance, which thus decreases the interest sum due. Without changing the EMI post part installment, the commitment of EMI towards main reimbursement increases. In this manner the advance gets reimbursed in a faster as well as quicker manner.

How does Home Loan EMI payment reduce tax obligation?

Arrangements under salary charge laws permit Indian Nationals to case wage charge alleviation on installments made towards interest and foremost of home advance.

One of the best ways to assure your financial estimations and calculations is by looking out for an easy Home Loan EMI Calculator. The EMI calculator will in turn let you know the chargeable monthly reimbursements that are to be paid by your end and also helping you understand the loan amount according to the interest rate you are eligible for.