Purchasing a house is undoubtedly one of the biggest financial investments which you will make during your lifetime. Most of us do not have to require the financial capability to purchase a home out of our savings. This is why home loans were invented. It gives us the liberty of purchasing a piece of property today and repaying back the loan as per our convenience which is one of the biggest advantages.
However, as the repayment period can span decades depending on the lender being opted for. For this reason, it is more than essential to exercise caution when choosing the monthly installment. Here are thus a few pointers which you must remember so that you can better manage your housing loan installments -
Check your Earnings
If there is a single biggest factor which determines your installments, then this is it. Most lenders usually require 40 to 45% of your monthly earnings as your monthly installment given that you are not already repaying another loan. This is because after paying all your installments, you should be saving a minimum of 15% of your salary. If you have your own business or are self-employed, then there are good chances that your income will fluctuate. For this reason, you should consider the average of your 12 months’ earnings and set your monthly installment. You can also make use of the housing loan EMI calculator to get a more accurate estimate of what your monthly installment should be.
Considering Future Expenses
Most people take into consideration the fact that their income will grow, but they do not understand that so will their expenses. This is because, with time lifestyle changes, medical expenses, educational expenses all contribute towards elevating the total expenses in the future. On top of that inflation will also be there. You should thus opt for a monthly installment which you believe you will be able to repay be it now or in the future.
Hopefully, the above-mentioned factors help to manage Home Loan EMIs effectively.
However, as the repayment period can span decades depending on the lender being opted for. For this reason, it is more than essential to exercise caution when choosing the monthly installment. Here are thus a few pointers which you must remember so that you can better manage your housing loan installments -
Check your Earnings
If there is a single biggest factor which determines your installments, then this is it. Most lenders usually require 40 to 45% of your monthly earnings as your monthly installment given that you are not already repaying another loan. This is because after paying all your installments, you should be saving a minimum of 15% of your salary. If you have your own business or are self-employed, then there are good chances that your income will fluctuate. For this reason, you should consider the average of your 12 months’ earnings and set your monthly installment. You can also make use of the housing loan EMI calculator to get a more accurate estimate of what your monthly installment should be.
Considering Future Expenses
Most people take into consideration the fact that their income will grow, but they do not understand that so will their expenses. This is because, with time lifestyle changes, medical expenses, educational expenses all contribute towards elevating the total expenses in the future. On top of that inflation will also be there. You should thus opt for a monthly installment which you believe you will be able to repay be it now or in the future.
Hopefully, the above-mentioned factors help to manage Home Loan EMIs effectively.
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