Congratulations! After weeks of research and much contemplation, you have been finally able to purchase your dream home. You have finished all the formalities and have a home loan to fund your house. However, your role does not end here. Along with repaying the loan, there are certain things that you should consider for your financial well-being. You must maintain monetary prudence and live a sustainable financial life so that you can comfortably repay the home loan EMI throughout the tenure.
Here are some tips that you can adopt once your loan EMI starts to meet the new commitment efficiently.
Pay your EMIs timely
Paying your EMIs timely is the most crucial aspect of having a home loan. You have to avoid any chance of defaulting on the EMI payment. Non-payment can have many consequences. The lender can impose a penalty, increasing the cost of borrowing. In addition, it could ruin your credit score and adversely impact your credit report. As a result, you might face problems in getting any loans in future. Therefore, ensure that you have enough balance in your EMI account to pay the EMI timely. You can keep a reminder or start automatic payments so that you do not miss any EMI payments.
Maintain your credit score
It is advisable to maintain your credit score while servicing your home loan. If you have other debts, pay their EM timely and also ensure that you check your credit report for any discrepancies.
Keep a stable job profile
One of the home loan eligibility criteria is having a stable job profile that must be maintained even after the starting of EMIs. If you switch too many jobs or lose your job during your tenure, it could hamper your credibility. However, equally necessary for you is to look for high paying jobs to increase your income. You can also look for additional sources of income as it can help you assure the lenders of your repayment capability. Moreover, if you switch jobs, look for job security. Join only those organisations that offer you a salary hike along with job security.
Know about the tax deductions
You must be aware of the various tax deductions available on home loan repayment. You can claim a tax deduction from your income on the principal up to Rs 1.5 lakh and on the interest repayment up to Rs 2 lakh under sections 80C and 24 (b) of the Income Tax Act, 1961, respectively.
Strive for prepayment
You can save on interest by prepaying the loan. Avoid impulsive spending and divert all surplus funds for prepayment. You can use bonuses, monetary gifts, freelancing income, etc., towards partial prepayment. If you have floating interest rate home loans, you will not have to pay any prepayment charges.
Your responsibility is not only limited to paying the EMI after taking a home loan. You must maintain your financial balance and make changes in your habits to accommodate the additional liability. Also, keep an eye on the housing loan updates that the government announces periodically.