For most people, being a homeowner is one of the most rewarding experiences they can have. It makes sense to take out a home loan to cover the buying price of the property because it necessitates a big capital outlay. An HDFC home loan not only eliminates the need to save for years to save enough money to buy your dream house, but it also gives favourable tax benefits. HDFC home loan interest rate is another benefit that comes your way when you choose to apply for a home loan at HDFC. Now that you’re convinced of the advantages of taking out an HDFC home loan, you might be wondering about home loan repayment. What is the procedure for repaying a home loan? You have a variety of home loan repayment options to choose from.
However, before we get into it, let’s have a look at how home loans are paid back. EMIs, or equated monthly payments, are used to repay your house loan. This is a fixed monthly payment you must make to your lender until your home loan is completely paid off. Each month, your EMIs will be due on a set day (for example, say 3rd of each month). You must pay EMIs until your home loan is paid off at the end of the loan term. Each EMI is made up of part principal repayment and part interest payments on your loan.
Although the EMI remains constant throughout the loan term. The interest component of the EMI is larger in the early years (and the loan repayment component is lower). The situation flips as you get closer to paying off your house loan. With the principal repayment component of your EMI increasing while the interest component decreases.
HDFC Home Loan Repayment Tips
Here are a few ways through which you can easily repay you existing HDFC home loan:
1. Early Repayments:– Taking up a home loan in your 20s or 30s provides you plenty of time to pay it off before retiring. Furthermore, you have the option of taking out a longer-term home loan. Which means a reduced EMI for the same loan amount. A home loan can be taken for a maximum of 30 years. Which gives the borrower plenty of time to repay the loan with small EMIs.
2. Timely EMIs:– The order in which you make your monthly EMI payments has a significant impact on your cash flow. If you have a job, your EMI should be the same as your salary date. If you work for yourself, ensure you have enough money in your bank account to cover the EMI payment. Ensuring that your EMI is paid on time prevents you from incurring any additional fees as a result of late payments and preserves your credit score.
3. Emergency Planning:– Your financial plan should assist you in building an emergency fund, which will come in handy in the event of a medical emergency, such as immediate hospitalisation or an accident. This will ensure that the cash set aside for your EMI payments. Are not impacted in the event of a financial emergency.
4. EMI Limitation:– If you have any other loans, such as a car loan or a personal loan, the EMI calculated using the HDFC home loan calculator should be added to your other loan EMI payments to determine how much of your total earnings is set aside for loan repayments. It’s best to keep your loan payments at no more than 40% of your monthly income.
Read Also:- Disadvantages of a Low CIBIL Score