How to reduce the burden of your home credit loan payments

Meet the Sharma family. Anjali and Krishna Sharma recently purchased their dream home. With their growing family, it was a much-needed purchase financed by a home loan. However, with school fees, daily expenses, and future savings to consider, they know they need a plan to manage their home credit loan payments. A strategy that doesn’t compromise their financial stability.

If you, like the Sharmas, want to ensure that you make timely payments and maintain a healthy financial balance, read on! Let’s explore how you can create a robust home credit loan payment strategy that helps you stay on track with your loan.

What is a structured loan payment plan?
 

A structured loan payment plan is a personalised financial strategy. It outlines how you will allocate your income to cover your home loan payments and other essential expenses. 

To understand the importance of structured home credit loan payments, let’s assume you are driving without a map. You might eventually reach your destination, but it might take a while. A structured payment plan becomes your GPS in your home credit loan journey. It will help you stay on course, reach your financial goals, and avoid unnecessary detours. 

Here’s why a home credit loan payment strategy is important –

1. Predictability and peace of mind

With a well-structured plan, you clearly understand your monthly financial obligations. This predictability relieves stress and provides a sense of control over your finances.

2. Avoiding late payments and penalties

Setting aside funds specifically for home loan payments reduces the likelihood of missing deadlines and incurring late fees, which can impact your credit score and financial health.

3. Emergency fund cushion

A structured home credit loan payment plan includes provisions for building an emergency fund. This safety net can help you weather unexpected financial storms, such as job loss or medical expenses, without jeopardising your home loan payments.

4. Debt management

A structured plan can help you manage your other debts so that multiple payments do not swamp you. You can reduce your debt over time by prioritising your home loan payments and allocating funds to other debts according to a well-defined strategy.

5. Financial goals achievement

A structured plan will align with your financial goals, whether saving for your child’s education, planning for retirement, or aiming to build wealth. 

With a well-structured plan, you will stay on track and achieve these objectives. An ideal home credit loan payment strategy should –

• Align with your income
• Prioritise other expenses
• Consider future goals
• Include a contingency fund

By creating a detailed plan like this, you can visualise your income and expenses, identify areas for cost-cutting, and ensure that your home loan payments remain a top priority.

How to determine a realistic loan payment plan
 

The first step in creating a structured home credit loan payment plan is to assess your monthly income and expenses. To evaluate your monthly income and expenses and draft a realistic repayment plan, you can follow these steps –

1. Track your income –

List all your sources of income, including your salary, rental income, and any other additional earnings.

2. Categorise your expenses –

Divide your expenses into fixed costs (e.g., rent, utilities, loan payments) and variable costs (e.g., groceries, entertainment).

3. Calculate your net income –

Subtract your total expenses from your total income. You will get a clear picture of how much money you have left each month.

4. Factor in your home loan payment –

Once you know your net income, you can determine how much you can realistically pay toward your home loan each month.

Should you make extra payments, and why?

Have you ever wondered how to reduce home loan interest or tenure? The answer is extra equated monthly instalment (EMI) payments.

When you prepay your home loan, you get the following benefits –

1. Reduced principal balance, which means lesser interest charges and more savings over the life of your loan

2. Shortened tenure, which means you will be debt-free sooner, giving you more financial flexibility and peace of mind

3. Financial flexibility, since a shorter loan term frees up more of your monthly income for other financial goals, such as saving for retirement, your children’s education, or investments

How to pay extra EMI for a home loan? You can either increase your monthly EMI amount or make lump sum payments towards the principal amount. Doing so can reduce the tenure of your home loan and save on interest costs in the long run.

Why consider IDFC FIRST Bank?
 

Choosing the right home loan lender makes a notable difference in your home credit loan payment and financial stability. The IDFC FIRST Bank Home Loan provides flexible options and competitive interest rates.

1. Attractive interest rates

IDFC FIRST Bank offers a Home Loan, starting from ₹1 lakh to ₹10 crores. These competitive floating rates, starting from 8.85% p.a., are linked to an external benchmark rate. If the market goes down, you will enjoy a lower interest rate on your home loan. If interest rates decline, your EMI will automatically decrease, giving you more financial freedom.

2. Flexible loan tenure 

The home loan tenure ranges from 12 months to 360 months, which allows you to choose a repayment plan that fits your budget. You can spread your EMI payments over a longer period, making them more affordable. This can help you manage your monthly cash flow more effectively.

3. Online application process

Applying for a Home Loan is completely digitalised and requires minimal documentation. It saves you time and effort. You can apply for a home loan online, submit documents electronically, and track the progress of your application online. Moreover, there are various options for making home credit loan payments online.

4. Customised offers

IDFC FIRST Bank offers customised Home Loan options to suit your needs and financial situation. This way, you get a loan that fits your budget and requirements. It includes –

• Surrogate programs catering to self-employed customers to enjoy higher loan amount 
• Consideration for additional income like reimbursements, bonuses, and rentals when determining your home loan eligibility, which can be helpful if you have other sources of income besides your salary

These custom-made options make you eligible for Home Loans with the best features in the market. They allow you to assess your home credit loan payment plan and the affordability needed to maintain financial stability.

Why should you monitor the loan balance?

A crucial part of maintaining financial balance is regularly monitoring your loan balance and adjusting your home credit loan payment strategy as needed. Keeping an eye on your loan balance helps you stay informed about how much you owe and the interest you pay.

For instance, if your income has increased or you’ve received an unexpected windfall, consider adjusting your home credit loan payment to pay off your loan faster. Similarly, if you’re facing a temporary financial crunch, you may want to explore options to adjust your EMI or temporarily shift to a lower EMI plan if your lender allows. Moreover, if interest rates have declined, refinancing your loan could help you save money.

Ready to take control of your home credit loan payments?
 

A strategic approach to managing home credit loan payments not only helps you meet your financial obligations but also allows you to maintain a comfortable lifestyle. By regularly monitoring and adjusting their payments, you can reduce your loan tenure and interest, ultimately achieving your goal of homeownership with financial stability.

Apply for a Home Loan now and experience the difference.