During these hard times of COVID, this pandemic has hit us very badly. The economic crisis going during this COVID, managing the payments, paying loans and EMIs has become a formidable task for the common man. This has happened mainly due to salary cut-offs and layoffs which are been happening in most industries.
There are some ways to reduce your burden; RBI has announced a moratorium on loan EMIs of 6 months to tackle this financial problem. This period is commonly called as EMI holiday period, where you do not need to pay any of your EMIs during this period. This period has relieved a lot of people. Here are some of the smart ways for you, which will help you reduce your monthly burden of loan EMIs.
Financing your home again, for a loan at low rates of interest is one of the easiest and efficient ways to save on EMI payments. So, if you are really looking for how to reduce or shorten your home EMI loan, always consider changing your lender. Also, there is a possibility that you might have taken your home loan years ago, where the interest rates were on the higher side as compared to now. When you go for an alternate lender, it is not a complicated process. Start looking for another lender, who offers you low rates of interest and you can conveniently get a home loan transfer from your existing lender.
Many experts also recommend for opting a lender offering an MCLR (Marginal Cost of Funds based Lending Rates). This will eventually benefit you through repo rates. You can even use the EMI calculator to check the amount you will have to pay at a reduced interest rate.
In these hard situations, where a pandemic has already hit us so hard, many banks and most of the Non- Banking Financial Companies (NBFC’s) have already waived off loan pre-payment charges enabling all the money borrowers to pay the amount in bulk in order to repay their loan and clear it in advance. You can even use a home loan overdraft facility linked to your bank account, to deposit any amount higher than your EMI. This can be used as a pre-payment towards the home loan. It will eventually help in shortening the interest on the outstanding loan amount. You even also have the flexibility to withdraw this extra amount later, in any case, whether it may be in any emergency situation or any other. This outstanding loan amount can be adjusted accordingly.
You can use to opportunity and make a wise decision for yourself. Also, you can pool in your savings, and use this loan facility to reduce your home loan EMI’s.
Paying a higher or bigger amount of down payment is always a wise option to go for. When you pay a higher amount of down payment, in the beginning, you tend to reduce both interest and EMI amounts. This is the right time when you can use your savings for making a higher amount of down payment if you are up for a home loan. Moreover, government has also announced and relaxed the rules for withdrawal of funds from the Employee Provisional Fund Organization (EPFO) account.
Labour ministry had even also announced a notification allowing more than 60 million subscribers to withdraw up to 3/4th of their retirement savings. They can even withdraw three months of their basic salary and dearness allowance (DA) from their provisional fund account. They can choose anyone they feel is lower. Taking benefits from all these schemes and facilities, you can make a wise decision to pay a higher amount of down payment for your home loan.
One of the alternatives is to seek an extension of repayment tenure from your existing home loan lender. As you may be knowing, a longer tenure points towards paying comparatively more interest, but you can acquire a significant reduction in your monthly amount of EMI. If nothing else works, this one is the best choice for you to consider.
The approval for extension of the tenure period usually depends on your age, as the loan period is allowed till your retirement age and not beyond that. But still, you can approach or submit a request to your lender about the extension of the loan repayment period. This way can be considered as the final and last option for you to reduce your home loan EMIs.
When you get significantly more time to pay your loan, you get an advantage of paying less, and you can further manage it more conveniently.
As a loan seeker, if you are looking for methods and strategies, which will help you reduce your EMI burden in these COVID crises; these above-mentioned methods are definitely going to help you a lot. With some tactical moves and proper planning, you can cleverly or strategically manage your home loan with much ease during these testing times. Always try to go for a reliable lender offering you low rates of interest. You must also try to read and go through the rules and eligibility criteria given by the moneylender before officially signing the documents.
When you are aware of interest calculation, loan tenure, pre-payment options, and extension policies, you get an upper hand while making an informed decision.