It’s a great feeling to have a space that one can call home, and owning one is a primary objective for most Indians. However, giving away a large chunk of one’s salary as EMIs, month after month, is something all of us dread. Your entire budget revolves around the loan repayment and keeping at it for anything between 10 and 25 years can be a nerve-wracking experience.
However, with a little planning you can manage your finances and the mortgage outgo well. Also, saving and investing in the right products will help you retire with a greater peace of mind. So here are some useful tips.
Restructure your financial blueprint
Prepare a budget sheet after taking into consideration your family’s combined sources of income, list of monthly expenditures, and income from investment – after factoring in other short and long-term goals such as retirement planning.
Assess your risk appetite vis-à-vis investment options. Extending the home loan EMI in your retirement phase can put due stress on your finances. Considering the time period left to repay your loan, you could plan your retirement portfolio. If the loan is relatively new and has a long tenure of repayment, you could consider pre-paying a portion through windfall gain or bonuses. This in turn will help in reducing the EMI and effectively decrease the interest cost on your home loan.
The amount that has been saved on the interest cost by pre-paying a certain portion of your loan can be invested in equity-oriented instruments. Benefits from these equity oriented instruments will help you augment savings that can be deployed to pay off your EMI as you are nearing retirement
In case you have already retired and only have a few more years (3-5) to repay your loan, you will have to make sure that your monthly income post retirement takes the remaining EMI into consideration. Also, do remember you are eligible to get greater tax benefits on the home loan during your post retirement years.
A little goes a long way
A home loan can be quite a liability, but then a home is a permanent asset, and one that appreciates in value – at least over the long term. Let this be your motivation to save wherever possible. From taking public transport to resisting impulse shopping to forgoing annual vacations to eating at home whenever possible, remember that little drops make a mighty ocean. To maximise your financial potential, some hard calls are necessary.
Revise your EMIs
As the years pass and your salary increases, consider an upward revision of the EMI. It’s easy to maintain the status quo, but even a small increase in payment has a considerable effect on the tenure, thanks to the power of compounding. If your family gains any more earning members, it would be good to get them on board to share some of the responsibility.
Involve the family
Even if other family members may not assist financially, they can act as a huge support system. Everyone can do their bit to ease stress and offer motivation. From ensuring that water and electricity are not wasted, to undertaking small repairs and D-I-Y maintenance projects, one can save quite a bit on the operational costs of the household.
Choosing the right lender can help you reduce the stress over the years. Tata Capital offers you home loans at attractive interest rates and flexible repayment options. Log on to Tata Capital to check your loan eligibility and apply for a home loan today.
