How To Minimize Your Home Loan Burden

Marbella Grand — Mon, 13 May 2019 07:19:52 +0000

The process to own your home in Chandigarh and Tricity region is a long quest. It may take a while, from the purchasing decision to the point where a deal is finalized. In between all this, you are likely to acquire a home loan to facilitate your purchase. And you still don’t own the home till the home loan is paid off.

So are there any tricks to minimize home loan burden? Even a small reduction in the interest rate or reduction in the timeline of home loan payment can make tremendous differences in the final amount.

Consider these tactics regarding home loan repayment to reduce your burden:

Opt for a short-term home loan

A home loan acquired for a short duration is a sure way to pay lesser interest for your home loan. You pay less EMI’s and hence less interest on the overall principal amount. As you quickly pay-off your EMI the amount of interest on the principal amount keep on reducing. In the end, you will be able to save handsomely by taking short term home loan. Remember, you have to bear the burden of higher EMI’s under a short term loan.

Paying additional EMI’s

Whenever financially possible, pay extra EMI to the bank. This will reduce the principal amount and you will be able to clear your home loan earlier than the designated timeline. And as you pay extra EMI, the principal loan amount will keep on reducing, resulting in lesser interest amount.

Refinance the home loan

This is an old trick to strategize your loan payment. If you are able to find a loan (home, personal, etc.) at a lower interest rate than the current home, then consider taking it. But do it only after carefully evaluating the profitability to be gained out of the new loan.

Invest your extra income

Any extra income you are able to accumulate can be invested towards the payment of EMI. The annual increments, bonus, and rewards at the office can be smartly diverted towards EMI payment. This is a foolproof way to minimize the total amount of loan to be paid.

It is a good idea to speak to real estate experts about home loan reduction strategies. The SRG Group also offer guidance and support related to home purchasing and consultation regarding luxury apartments in Mohali.

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Important Clauses Regarding Home Loan Agreement Pact

Marbella Grand — Wed, 17 Apr 2019 10:08:20 +0000

The agreement pact of your home loan is an important deed during the purchase of a home. It is the agreement between the bank and the borrower that defines all the fine details about the loan. After the discussion with the bank representative and the mutual agreement between the two parties, the loan agreement pact is signed and filed.

The loan buyer needs to make sure that they are aware of all the clauses mentioned in the Terms & Conditions of the agreement. There are numerous sub-clauses that have been the bone of contention. Issues between the bank and the individuals have gone to the Courtroom because of various reasons.

Let us take a look at the important clauses that the individual should be aware of:

The Clause of Defaulting

In the laypersons’ term, a defaulter is the one who is unable to make the promised installment for their home loan as per the agreement. But the agreement clauses may include a host of other conditions where the borrower can be declared as a ‘Defaulter’. If the borrower is found involved in a civil or criminal court case then the bank may declare him/her as a defaulter. Certain banks may also include situations like Divorce or Separation with the partner as being the defaulter of the bank.

Clause of ‘Amendment of the Agreement’

At the time of the loan agreement, a certain clause seeks approval of the borrower. The amendment to the agreement, once approved by the borrower, allows the bank to modify the clause – including the interest rate, and also the payment of fine for early repayment of the loan. It is advisable to be aware of the same before signing on the dotted lines.

Interest Fluctuation Clause

Most borrowers would know that the bank offers loans that are either on ‘floating interest rate’ or a ‘fixed interest rate’. The floating interest rate home loan is typically based on the prevailing market conditions. This interest rate is subjected to amendment without the borrower’s approval. The borrower should be aware of the fine details of this clause so as to avoid any future disputes.

The Reset Clause

Widely known as ‘Force Majeure’ clause, this reset clause is designed to convert your fixed interest loan to a floating one. This situation can arise if there is a natural or unavoidable catastrophe that interrupts the natural flow of events. A situation of political unrest (war, communal violence, dissolution of the government) or a natural disaster (earthquake, floods and similar events) may give the bank a reason to execute the Reset clause.

To learn more about the lesser known home loan clauses one can speak to our real estate experts. Our counselor also offers valuable insight about the prevailing property trends in Mohali and Tricity region.

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