Your home loan can potentially be the biggest investment of your entire life. It is rare that a person would have the capital ready and has to invariably resort to home loans to make their dream come true. However, uninformed decision-making coupled with a lackadaisical attitude can end up taking a huge hit on your financial resources not just for a few years but your entire lifetime.
If you are just starting off, it is time to make amends from the very outset. We have come up with six ideas that would help you save up on your home loan.
- It’s all about calculation : The home loan calculator would not only tell you whether you are eligible for a home loan but would also give you a realistic time frame in which you can expect to pay it off. Once you know the limit, you can go ahead with planning the ways in which you can cut down on your loan payment.
- Give the honeymoon a miss : Lenders tend to use honeymoon or introductory rates on home loans as a marketing tool. If you come across one such offer, know that once that initial phase of euphoria passes on, you would be required to pay the market price at a higher rate of interest. Do your research and clearly communicate your queries to your lender before signing on the dotted line.
- Pay quickly and more often : Though there can be many strategies to save up on your money, the moral of the story remains that you should aim to pay it off as quickly as possible. Always go for lower time frames in which to make the payments. Surely you might have to pay more monthly and lead a frugal life, but when you actually find that you have saved a couple of years worth of interest, it’ll be worth it.
- Focus on the Principal : All of us who have had an unpleasant real life encounter with compound interest know how it feels to pay exorbitant interests every month and still not being able to cross the threshold of the principal sum. Additional repayments with some extra investment might help you cross the principal amount quite early. Paying the interest amount would be smooth sailing henceforth.
- Don’t neglect the package deals : Ask your lender whether they have any home loan package deals which you can avail. From a free consultation with a financial advisor to special discounts, every little benefit gives you the opportunity to handle the repayment process much better.
- Go for lower rates at the outset : Compare and analyse the various home loan options available on the market, the right lender can make the difference whether you have to part with a thousand bucks or save up the same amount of money. Even a percentage point would seem trivial when you make a deal but when your loan repayment gets extended to six months more because of it, you would repent hasty choices.