Home Loan EMI periods are running beyond the retirement age when it comes to numerous customers today. While repo rate walkings by the RBI have actually led to a sharp boost in EMIs, numerous customers have actually attempted to prevent the discomfort of high EMIs by enabling lending institutions to increase their home loan periods.
In numerous cases, customers have actually chosen really long-lasting loans that extend beyond their retirement ages. Typically, 15-20 years is thought about a perfect home loan period. But numerous customers have actually chosen really long-lasting home loans of 25-30 years and they are now responsible to pay EMIs even after their retirement age.
If your home loan EMI is likewise extending beyond the retirement age, the following are 5 ideas that you can utilize to minimize the concern:
Close the loan as quickly as possible
Increasing home loan period rather of EMI quantity can put a customer in an irreversible financial obligation trap. If you are feeling that EMIs have actually ended up being a huge concern, you need to attempt to close the home loan as quickly as possible by any methods.
You can delight in the real advantage of a home purchase just if it is debt-free. It will not just guarantee comfort however likewise increase the revenue margin in case you need to offer your house in future.
In case, you have actually bought your house for offering it later on at a greater cost, you will not have the ability to make any substantial gain due to the home loan interest that might be greater than the real cost in case of very-long term loans.
Also Read: Should you lease or purchase a house when home loan rates are increasing?
However, it might not be possible for everybody to close the home loan quickly. Such customers can check out the following choices.
Negotiate with the loan provider
You need to work out with the loan provider and ask to increase the EMI quantity rather of period. You might even work out for a lower interest rate in case your credit history is healthy.
“Borrowers should speak to their lenders to look at other loan repayment options. However, each lender is different and borrowers should speak to their lender directly to understand what is possible,” says Atul Monga, CEO and CO-Founder of BASIC Home Loan.
Home loan balance transfer
In case the loan provider doesn’t offer a practical service, you can check out the home loan balance transfer choice.
“If the existing lender cannot offer a viable solution, one may consider opting for a balance transfer to another lender offering a lower interest rate. While opting for a transfer, it is important to know the Current Credit score, the total tenure, the outstanding interest to be paid, etc., before opting for a balance transfer,” says Sumeet Srivastava, Founder and CEO of spocto, a debt-recovery platform.
Also Read: Step-up and Step-down Home Loans: Should you go with variable EMIs?
Partial prepayment
Another choice is to start making partial prepayments to minimize the primary element of the home loan. You can start doing so with any quantity after talking with the loan provider.
“Borrowers can consider having several options to get out of the difficult situation, like negotiating with the lender to lengthen the loan term or lower the EMI amount, or taking into account partial prepayment to lessen their monthly payment obligations,” says Srivastava.
“Depending on their situation, they may be able to do the home loan balance transfer at a lower rate or make extra payments in order to pay off the loan before retirement age. This could help to shorten the loan tenure and enable the borrower to pay off the loan before retirement age,” says Monga.
Refinancing
It is necessary for customers to proactively handle their home loan EMI period to guarantee a comfy retirement. To relieve the concern of long EMI periods, customers can check out the refinancing choice likewise.
Also Read: Use home loan overdraft center sensibly
“Lenders do not usually increase their repayment tenures beyond their respective retirement ages. However, you can consult your existing lender and refinance that balance amount into another loan and keep paying it off in smaller monthly settlements. Having a co-applicant with a steady income is great in such scenarios. You may even end up availing of lower interest rates,” says V Swaminathan, Executive Chairman at Andromeda loans and Apnapaisa.com.
“If your mortgage has no pre-payment penalty and you have extra cash reserves, consider paying a lump sum amount and closing it off. However, make sure that you have the liquid cash to do so. You do not want to end up house-rich and cash-poor in your retirement,” he includes.
