When taking out home loans, one of the deciding factors becomes the monthly EMI that has to be paid back to the lender. Depending on the credit score of the borrower and the loan tenure, the monthly EMI will vary. It has to be the right value for us to be able to shell out each month without impacting our other expenses and savings. Being a long term commitment, it should also not affect our plans for the future. 

If you are planning to make a large property investment like flats in Chennai, here are a few tips to manage your home loan EMI. 

Research well:

Almost all banks and other lending institutions offer home loans. You need to shortlist the reputed banks you might want to avail a loan from. Then do research the options they offer and how flexible their repayment tenure is. Check for the interest rates that they will offer for your credit score, and what the EMI amounts to. Alternatively, you can also approach the banks where you are already an account holder, as they will definitely get you a better deal if at least to retain the relationship. 

Better money management:

Of course, we are not experts, but you stand to gain much in developing better money management skills. This is vital for first-time home buyers, regardless of age and family situation. Take a note of your current expenses, split them into broad categories like rent, groceries, conveyance, utilities, clothes, trips, etc. This will help you identify any wasteful expenses and cut back on them. It also gives you an idea of how much you can afford to pay as EMI. The saved money can go towards your EMI payments. 

Proper Documentation:

Keep track of all your financial documents. Always keep them up to date and resolve any disputes with the banks immediately. Make sure that they are available to you within an instant’s notice. This helps clarify any issues regarding your EMI and other loan funds. It also helps speed up your decision-making process faster. 

Stick to the 60:40% :

Your monthly expenses should never exceed 60% of your pay. Try to keep them within this percentage, and the rest 40% goes to savings and investments. You can pay the EMI from 40%, as long as you strictly cut your expenses to be within 60%. If you can save more, that is an added advantage. 

Opt for a high EMI:

Try to keep the EMI as high as what you can comfortably pay. Over a period of time, the principal and interest will go down considerably and you might even have money to spare. With a high Emi, the tenure also goes down, and you will be freed from the loan within a few years. 

Make use of EMI calculators:

Most banks have EMI calculators on their sites. All you need to do is enter a few basic details on your income, expected interest rate, tenure, etc. which will give you a rough EMI amount. You can adjust the inputs till you arrive at a comfortable EMI that you can afford every month. It will also give you a realistic outlook on how much you should be saving. 

Auto Debit feature:

Home loan EMI is a recurring expense. But there are times when we might miss the due date, either from forgetting the date or from lack of funds. This will hurt the credit score and incur a late fee. It is always better to activate the auto-debit feature from your bank account. The EMI payments will go out on time regularly, and you will be conscious of ensuring that sufficient funds are always available. 

Credit Score:

The Credit score plays a significant role in the home loan value, interest, tenure, and EMI. The better your credit score, the better the deal you get out of the loan. Try to close any smaller loans before applying for a home loan. This will improve your credit score and get you a better EMI within your affordable range. It will also get you better interest rates on future loans. 

Lifestyle Housing is a reputed developer of apartments in Chennai. Our 3 BHK flats for sale in Chennai are popular among first-time home buyers. We offer expert guidance on financing your home.

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