Home loan EMIs can be a nightmare.
While you do have the satisfaction of knowing you will eventually own your home, you also have to grapple with having to spend less money, with fewer treats, with giving up on luxuries that you would otherwise have enjoyed.
We asked Get Ahead readers* to share their EMI stories and advice. Here's what London-based Sarvesh Saxena would advise if you are a first time home loan borrower:
I have some advice I'd like to share with people who are considering a home loan. I have helped someone in this capacity, so I thought some suggestions are worth mentioning.
Home loan
Home loans are a way through which every employed person can realise his/ her dream of owning a home.
This is a great product because it allows you to own something that ultimately increases in value, giving you financial stability.
Important things to consider when going for a home loan
~ Ensure you calculate the total loan payments yourself. You need to know the exact amount you will be paying at the end of your loan term. You also need to know the penalty you will be charged if you prepay the loan. Sometimes, such penalties can be substantial.
~ Loan repayments are tricky to calculate, so make sure you know how the payments are worked out on a compound interest basis.
~ The kind of interest rate you choose is also very important. Are you going in for a fixed rate loan or a floating rate loan? If you are a first time buyer, make sure that, whatever option you choose, your EMI remains fixed even if the interest rate goes up for the first few years of your loan term. This will enable you to plan ahead and feel safe that your payments will not increase like they would with a pure floating rate home loan.
~ Before you go in for a home loan, make sure you have a good credit history. Banks and other financial institutions use credit checks. To have a good credit history, you should pay your credit card bills on time and not change your house address frequently.
~ Try and set aside a solid deposit, say 15 per cent of your property price, so you can make your monthly payments even if you are without a job for a brief period.
~ Ask your lender if they will allow you to make more than your allocated payments. If they agree, you can pay more money whenever possible, so that you pay less interest at the end of your loan tenure.
~ Before applying for a home loan, you should know for sure you have a permanent job to pay your EMIs on time. If you are holding a temporary job and you lose your contract and fail to make payments on time, it may result in the bank taking away your home.
~ Use money wisely and gradually. Don't expect sales persons from banks to educate you. Do your research thoroughly and then make a decision.
~ Finally, any form of credit does carry its risk. But, if it is managed in a methodical manner, you will be in a comfortable position in the future.
DON'T MISS!
Are you facing a similar problem? Have EMIs crippled your life as well? If yes, how are you coping? Are you cutting down on your monthly expenses? Are you borrowing to repay your loan?
What solution have you developed for your home loan problem? Share it with other Get Ahead readers.
We will feature the best and the most imaginative/ practical solutions to home loan woes right here. Make sure you include your FULL NAME, AGE, OCCUPATION, HOME LOAN AMOUNT, THE INTEREST AT WHICH YOU HAVE TAKEN THE LOAN and the CITY you are based in.
Your advice could help others manage their home loan problems. Write in now.
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