How to Buffer Your Home Loan EMIs for the Tough Months? - Home Loan Stories | Kotak Mahindra Bank

17 JUNE, 2021

A home loan is a long-term financial commitment as its tenure can extend up to 20 years. Hence, it’s always a good idea to plan your monthly budget so that you do not miss out on your EMI payments. However, the fact that an unanticipated financial crisis can arise at any time shouldn’t be overlooked. At such times, keeping up with regular EMI payments can be challenging. Thus, it’s advisable to buffer your EMIs for tough times so that your home loan repayment stays unaffected.

Mentioned below are some measures that you can take to buffer EMIs for those tough months.

Make small savings

When your income is steady, you must focus on making small savings. Try to cut down on your avoidable expenses and save for the buffer amount. You must set a goal of having a reserve of at least 3 EMIs. These savings can help you sail through tough times and you can take care of the EMI payments without much difficulty.

Avoid other debts

A major portion of your monthly income could be spent towards the home loan EMI payment. Hence, it’s advisable to keep other debts as low as possible. Avoid taking new loans unless absolutely necessary. Also, minimize the use of credit cards as non-payment of outstanding balance attracts high interest which can increase your debts.  Maintaining low debt will help avoid the stress of paying too many bills during tough times.

Prepay when you have surplus funds

The prepayment facility allows borrowers to repay their home loan before completion of the specified loan tenure. Therefore, whenever you get access to surplus funds, utilize them wisely to prepay your home loan. This can reduce your repayment burden and help you close the home loan sooner. The prepayment clauses and charges may vary from one lender to another. Ensure that you read and understand the prepayment clauses carefully before availing a home loan. This will help you avoid any inconvenience at a later stage.

Insure your home loan

You should consider purchasing a home loan insurance. A home loan insurance policy will protect your loved ones from the burden of repaying the loan amount in case of an unfortunate incident. Additionally, some home loan insurance providers offer add-on covers like rider plan for loss of job and disability that can be helpful to pay the EMI in case of sudden unemployment or an accident.

The above-mentioned tips can help you take care of your home loan EMI during tough times. However, if you find yourself struggling to make regular EMI payments, you must not hesitate to inform your lender about the same. Most lenders are usually supportive and may figure out ways to reduce your repayment burden. They may consider increasing your loan tenure so that your monthly instalment reduces.

With Kotak Mahindra Bank, you can avail a home loan and customize your monthly instalments according to your repayment capacity. You can also get an estimate of your home loan EMI by using our online EMI calculator. Moreover, with us, you can avail a home loan at attractive interest rate, less prepayment charges, efficient customer service, and round-the-clock assistance.

 

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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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.