Why you Must Buffer your Home Loan EMIs for Tough Months?

Posted by Nidhi Kohli on February 17th, 2021

Home loan comes with a long-term financial commitment that can last for several years. It is necessary for you to make the EMI payments on time every month, else, there are chances of default and possession of the home by the lending agency.

In this highly volatile marketplace, your job and income are vulnerable to risks. Growing inflation can also put significant burden on your finances and rise your cost of living. In such circumstances, borrowers still have to pay their EMIs on time. For all such reasons and many more, it is necessary for home loan borrowers to buffer EMIs for tough times.

Here in this post, we are going to discuss some measures that borrowers can take to buffer EMIs for tough times:

• Take your income, possible promotions, appraisals, job security, etc. in to consideration to buy only the right amount. Do not borrow more than required else it will increase your financial liability.
• Make sure the personal loan tenure for home is just right and not too long. It should not expanse for several years not it should be too short. Use home loan calculator to calculate a loan tenure that shows the EMIs you can easily afford without putting any strain on your finances.
• Calculate your monthly budget again to include EMIs. You may have to correct your monthly budget one several parameters like utility bills for your new home. It is necessary to redo your budget so as to avoid any financial strain.
• Prepay some amount of your home loan when your finances are strong. It will help you reduce the total amount of home loan and also lower the interest rate.
• Do the savings and build an emergency fund, it will help you to continue paying EMIs during the tough times. Set aside some fund every month to create an emergency fund.
• Avoid taking any other types of debt. Home loan EMIs can form a significant part of your income and often last for more than a decade. So, you should not take any new loans or credits unless absolutely needed. Use your credit card minimally as they carry a high-interest rate and pay other debts as early as possible.
• Leverage the tax benefits available for home loans. Tax benefits can be taken for home loan interest rate repayments and principal amount. They can also be claimed for home renovations, home loan processing fee, registration fee, etc. Tax savings can improve your savings, which can be used to pay EMIs during tough times.
• Buy an insurance on the house. This will help you when some damage is done by fire or natural calamity.

These are some of the measures you can take to buffer your home loan EMIs during tough times.

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