How to plan your SBI Home loan EMIs to avoid default

Obtaining a housing loan to finance the purchase of your ideal home is a prudent decision for a number of reasons. Not only will the property increase the value of your tangible assets, but you will also be eligible for tax breaks on your principal and interest payments thanks to Sections 80C and 24 of the Internal Revenue Code, respectively. However, given the larger loan amounts and longer repayment terms (which can reach up to 30 years), it is in the best interest of the borrower to pay off the SBI Home Loan as early as possible. Before you get the loan or even when repaying it, here is how you should prepare for and manage your monthly home loan payments (EMIs):

Choosing a longer loan term will result in smaller SBI home loan EMI

When a home loan is taken out for a longer period of time, the monthly payments will be smaller. This makes it easier for borrowers to repay the loan without putting undue strain on their resources. When deciding the length of your housing loan, it is important to take into consideration your age, income, and ability to make EMI payments and also use the SBI Home Loan EMI Calculator whenever required. Because house loans typically entail larger loan amounts, borrowers should select tenures that are longer than the minimum required so that they may more easily make payments of the EMIs throughout the term of the loan. If, on the other hand, you are set on obtaining a loan with a fixed interest rate, it is in your best interest to select a shorter payback tenure, as most lenders impose prepayment penalties on loans of this type.

The personal loan EMI calculator will help you to calculate your EMI which further guides you toward the loan process. It enables you to decide how much loan you can afford and what amount you can pay as EMI  you can pay without putting yourself in trouble. 

Additionally, the availability of the SBI Home Loan EMI Calculator tool makes it even more straightforward for borrowers to acquire greater clarity on the EMI amount they would be required to pay according to the loan amount, interest rate, and tenure that they have selected.

Consider taking one or more of the following actions in order to cut down on the overall amount of interest you will have to pay during the life of your loan:

Raise the amount of your EMI payments when you get increment

Because the majority of borrowers who are members of the salaried class receive an annual increase in their wages in the form of increments, bonuses, yearly performance appraisals, and so on, they ought to consider raising the amount of their EMIs at the same time. You would be paying more than the actual EMI amount, which would aid in reducing the total amount of the loan that is still owing if you increased your EMI amount on an annual basis. You can also use SBI Home Loan EMI Calculator to check how much your EMI will increase in order to get a fair idea about your expected payout. Remember that a higher EMI would result in a significant reduction in the period of time it would take you to pay off the loan. 

When increasing the amount of your EMIs on an annual basis after checking SBI Home Loan EMI Calculator, you need to ensure that your FOIR (fixed obligation to income ratio) does not go above 40–50 percent. This is because lenders determine your ability to make payments depending on your income and FOIR.

Pay in advance wherever it is possible

Prepaying your SBI Home Loan is an efficient approach to cut down on the amount of principal you still owe, the amount of interest you will have to pay overall, and the length of time it will take you to pay it off. As a result of a regulation issued by the RBI, financial institutions are not permitted to levy prepayment or foreclosure penalties in connection with floating interest rate term loans. Your outstanding principal amount will be reduced directly, and you will save money on the interest component of the loan throughout the course of the loan’s term if you make partial prepayments.

However, prepayment should be scheduled in such a way that it does not impair your liquidity. It should also be prepared to occur when you receive a bonus or when an investment has reached its maturity.

Like, in case you plan to make a prepayment of Rs. 120,00 within the following 12 months, you might begin setting aside Rs. 10,000 every month in order to build the necessary sum for the prepayment. In addition, if you prepay your loan and maintain the same amount of monthly EMI payments following the prepayment, your SBI Home Loan will be paid off before the end of the tenure. However, the lender will typically make an offer to reduce your EMIs if you continue to make payments over the same number of years after you have paid off part of the loan in this entire process; you can utilize SBI Home Loan EMI Calculator to check EMI changes regarding any move you make.

Consider a balance transfer

Borrowers ought to take into consideration going with a home loan balance transfer (HLBT) in the event that either their existing lender’s competitors are offering a lower interest rate and terms of service, their existing lender denied their request for a home loan top-up or additional product features are being made available by other lenders. Also, considering that most borrowers will have already paid a significant portion of the interest component of their loan during the earlier stages of the loan itself, a home loan balance transfer will not result in significant cost savings if the new loan is for a longer duration than the previous one.

Borrowers should make every effort to maintain the new tenure of their SBI home loan exactly the same as the remaining duration of their existing housing loan. This would relieve you of the stress of making additional interest payments, which you would have already been required to make in the event that you picked a longer repayment term than the one that is still available. In addition, if you want to lessen the strain of your EMI payments, you should select the longest possible term for the new loan. This will allow you to pay off the SBI Home Loan whenever you have extra money available, whether it be because of a promotion, a bonus, or the maturation of an investment.