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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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Having debt is like a financial burden that you need to carry until you clear it off. Many times, people borrow more than their repaying capacity and end up creating a significant financial burden for themselves. Moreover, some people borrow smartly, yet situation fold in such unfortunate ways that even a small amount becomes an excessive loan for them. If you are also facing several issues due to too much debt, then here are some ways you can reduce the burden of loan.
Using Investments to Pay the EMIs
When you fail to pay the EMIs, it reflects negatively on your credit report. As a result, you face several problems while applying for a loan next time. So rather than avoiding EMI payments, you can use your investments such as fixed deposits, gold, etc. to repay the debt. Investments are meant to help you through the times. It is the right time to use them when your loan becomes a burden.
Loan Against Property
The excessive debt is a result of multiple loans. Many times, people take various loans such as personal loan, business loan, etc. at a time to support their financial needs. This eventually leads to multiple EMIs consisting of interest. Managing all these EMIs becomes extremely difficult. If you have also done the same mistake, then you can rectify it by taking mortgage loan against property to consolidate your debts.
Applications for a loan against land or property are easily accepted by the banks as you provide security against the loan. They are quickly disbursed and the bank provides you lower interest rates. The loan amount depends on the cost of the property. Considering the current prices of property, you can obtain a sufficient amount to pay off your debts with a loan amount obtained from the property mortgage loan. Once you pay off other loans, you can concentrate on paying the EMIs of a single loan.
Financial Planning
Managing finances is not a thing that you can figure out without a firm plan. Considering the current rate of inflation, you must have a plan to manage your finances. Beginning of every year is an ideal time to start with the plan, where you will systematically allocate your financial resources for categories like daily expenses, additional expenses, EMIs, etc. This plan not only helps you with daily expenses and your savings target, but it will also help you to manage your debt.
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