In today’s economy, the increasing cost of living can make saving enough money to build a home nearly impossible.
Amidst the challenges of today’s economy, where the cost of living is on the rise, a home loan from a bank, with manageable monthly installments (EMI), can be a strategic tool to turn your dream of homeownership into a reality.
Home loans typically have a tenure of 15 to 30 years. Opting for a longer tenure will result in lower EMIs while choosing a shorter tenure will mean higher EMIs. This principle must be considered when deciding on the loan tenure.
When applying for a home loan, the bank generally requires your income to be at least double the EMI amount.
You will also need to provide your payslips to demonstrate your eligibility. Banks aim to ensure that the EMI is less than 50 percent of your income to prevent financial strain.
One key strategy for reducing your monthly EMI is to work on improving your credit score. A higher credit score often translates to a lower interest rate, reducing your financial burden.
Many banks offer lower interest rates to customers with a credit score above 800. It’s wise to improve your credit score before applying for a home loan by paying off any outstanding dues and consistently paying credit card bills on time.
If you are married and employed, applying for a joint loan can significantly reduce the EMI burden. Additionally, a shorter tenure can lead to quicker home loan repayment.
Lastly, if you wish to lower your monthly EMI burden, consider transferring your loan to a bank that offers a lower interest rate.