3 tips to plan your Rs. 1 crore Home Loan repayment

We all strive for financial and emotional security. Buying a home assures both. You acquire lifetime asset ownership when you buy a home. This ensures a roof over you and your loved ones regardless of your financial situation. Buying a home lets you build something you will cherish for a lifetime and can pass on to future generations.

A significant amount is required to buy a home. You may not be able to arrange the amount despite cumulating your years of savings and investments. Consider applying for a Home Loan to finance your home purchase. You can borrow a considerable amount at a competitive interest rate for a preferred tenure. You can apply for a Home Loan with any bank following a simple procedure.

But before that, plan its repayment. This helps you repay efficiently without any financial struggle or defaulting. Following are practical ways to plan your Home Loan repayment:

Know the payable EMI

Firstly, determine the payable Home Loan EMI. It helps you gauge your Loan affordability and accordingly apply. The Home Loan EMI calculator is an online tool that helps to determine your Loan eligibility and plan repayment.  Just enter key Loan variables, and the EMI calculator handles the rest. You get accurate results in minutes. Suppose you wish to apply for a Home Loan worth Rs. 1 crore at 7% for a tenure of 10 years. Enter these variables in the EMI calculator.

Once you calculate, the calculator shows Rs. 1,16,108 as the Rs. 1 crore Home Loan EMI. If the obtained EMI is within your affordability, apply for a Loan right away. If it is beyond your affordability, reconsider the Loan variables to apply when you have built a stronger financial profile.

Make an additional repayment

Ideally, you need to make a total of 12 EMI payments towards your Home Loan repayment every year. Try to make an additional payment every year. This lets you repay the principal Loan amount faster, reducing your overall interest liability. You can use your festive bonuses and refunds to make an additional payment.

Make pre-payments

Prepayments mean repaying the Loan amount before the tenure completion. Doing so reduces your principal Loan amount and associated interest liability, making your Rs. 1 crore Home Loan EMI more affordable. You can repay the Loan without straining yourself. A few banks charge for the prepayment facility, while others do not. In either case, you should consider making prepayments.

This is because bearing a penalty is far more favourable than bearing hefty interest liability.  Contact your bank’s customer representative or check their website to learn about their pre-payment rules, regulations, and charges.