5 Imperative factors of EMI payment
Posted on: 31/Oct/2017 3:33:00 PM
It is an extensive job to buy a house, as it involves a lot of deep research and arrangement of funds. It has further got challenging with the increased pricing of properties. You can however escape the crisis with home loans, even if you do not have sufficient funds to buy a house. This is a long term financial commitment involving bulky payments for years and monthly money flow called Equated Monthly Instalments or EMI.
Almost 90 percent of the property value is given out as loan. For instance, when you want to buy a property worth Rs 30 lakh, you will have to pay just Rs. 3 lakh and the bank would take care of paying the rest. Based on how far you are eligible for, the loan repayment tenure will vary and may increase up to 30 years. Hence, you get Rs 27 lakh with tenure period of 30 years for which the buyer has to pay EMI of Rs 20.76K at 8.5 percent interest.
Before applying for the housing loan, you need to understand the EMI to be paid. When you miss your EMI payment, there may be severe repercussions on the personal finance.
Why is on-time repayment imperative?
The total duration of home loan is 10 to 30 years for which regular EMI payment is mandatory. Your CIBIL score will get impacted with your pattern of EMI repayment. This will on the whole improve your CIBIL score and improve the possibility of availing loan afresh. When you fail to make on-time payment, it will have negative consequence in both CIBIL score as well as availability of fresh loan.
When you fail to pay EMI for 2 or 3 months, your name will be tossed into the list of defaulters, and you will have to clear the due within the time given. When you keep defaulting EMI payment, necessary action may be taken by seizing the property and may be recovered with property auction. In general, the defaulter will be given enough time for repayment and to clear the outstanding EMI. When delay continues, the bank will roll out a notice that it would acquire possession first, and an auction date will then be announced if the lender does not clear the dues within given time.
When you have taken a home loan, you ought to repay the loan on-time, or you would lose your home.
Get loan based on your income
Before considering to buy a home loan, check out your income level. Do not stress yourself in terms of finance for repaying the EMI. While buying a home, consider different components such as security fees, society fees, maintenance charges, and so on. There is no loan to help you with these expenses - keep that in mind. Have savings in hand to meet such expenses which may affect your EMI payment every month.
Long duration loans
When you are not sure of the income consistency, it is better to choose long duration loan and bring down the EMI payment every month. You may personally wish to repay the loan early by paying extra EMI. When there is liquidity crunch, it will not be difficult for repaying EMI.
Auto Debit EMI payment
You have the option of automatically debiting EMI from your bank account for repaying EMI. You need to fix a specific date to auto-debit EMI after which the EMI amount shall get debited from your account automatically. This helps you in clearing the EMI on the exact due date and eliminates the need for manual payment and payment of wrong value of cheque.
Contingency fund
You need to have contingency fund for at least eight months before you opt for getting a loan. This will ensure prompt EMI repayment when there is an emergency or irregularity in income. When there is surplus contingency fund, you will not have to worry about the scenarios such as late salary payment of loss of job, etc.
By making timely EMI payment, your financial image and CIBIL scores get largely improved. You can easily live in your home with your family without any kind of stress about EMI repayment. For ensuring personal finance stability, you need to ensure taking all the needed steps for paying EMI promptly on time.
