Smart way to manage your home loans

Posted by Robbin K on September 12th, 2016

Your decision to purchase your first property is a very important one. When you apply for home loan, you are getting into a financial commitment for the longer term. While you do the best to prepare in terms of paper work, getting fund ready for down payment, your bank also does a rigorous credit assessment process to ensure that lending to you loan will entail the minimum amount of risk.

While availing housing finance there is no specific formula to monitor or analyze them. Everyone will go through various financial requirements in their life and hence their goals are very different. Some may want to reduce their EMI while some would prefer to increase it to shred off the loans as quickly as possible.

Home loan process involves lot of banking jargon. The article explains some basic pointers that will help you understand the subtle difference between refinance, restricting and balance transfer.

•Refinance is when you need additional money against your existing home loan property. It is like a top-up facility. It is advisable instead of unsecure personal loan as opt for refinancing as it will come at lower interest rate, emi and have flexibility to repay.

•Restructure is when you keep the loan amount constant and increase or decrease your monthly installment by adjusting your tenure. Reducing premium is ideally done to meet other commitments or increase the EMI to close the loan at faster pace.

•Balance transfer is simply moving your house loan from one bank to another, and benefit from a change in the interest rate.

The first step would be clear with your goal. Whether you need more money, want to reduce emi, want to reduce interest rate or close the loan faster. Once you clear on your goal, two important variables like what’s your current house loan interest rate and what’s current house loan interest rate for new house loan. If the difference in interest is more than the processing fee that you need to pay for the new loan, it’s recommended that you change your house loan from current bank to new bank. Please be careful to evaluate the total cost including the mortgage registration.

Internet based era has eliminated the days when you had to visit banks or financial companies, fill-up lengthy forms, submit forms with relevant documents and wait for months to check if your loans have been approved or not. Your loan application is done at the touch of your button right from home or offices. You can visit comparison sites to compare loans with the best of the interest rates, low processing fees, EMIs and flexible repayment option. Most banks and financial companies have taken a step ahead and have introduced mobile apps via which you can not only check your home loan eligibility, but can also make EMI payments, track your outstanding balance or check the interest rate applicable on your housing loans.

Taking a housing loan is an important financial decision, it is important that you read all, the term and conditions carefully as what you negotiate and agreed upon. Understand your Home loan policy in terms of the interest rate applicable, processing fees, pre-payment penalty charges, conversion fees, etc.