Expert tips to plan your EMI better

While planning out the easy monthly installment amount for a loan, the most vital factor that is taken into consideration is the current day take-home income. Thus, if you are planning to apply for one, you must know that home loan EMIs are a huge financial takeaway from your income. EMI deductions need to be managed appropriately because if not done so, they can cause your life to go haywire. Read on to plan your EMIs better:

Expert tips to plan your EMI better

While planning out the easy monthly installment amount for a loan, the most vital factor that is taken into consideration is the current day take-home income.  Thus, if you are planning to apply for one, you must know that home loan EMIs are a huge financial takeaway from your income. EMI deductions need to be managed appropriately because if not done so, they can cause your life to go haywire. Read on to plan your EMIs better:

  1. Check your income: As mentioned already, income is the most important, and sometimes the only factor considered while applying for EMIs. Thus, it is mandatory to stick to the amount that will be feasible to pay with your fixed income. This will help you in maintaining a balance between the income.
  2. List down your expenditure: Monthly payment of EMIs can be vicious if you do not plan out the process in advance. You need to cut down on your monthly expenses to pay the EMI without fail. Hence, as cited above maintain a balance between the income and expenditure while applying for the loan.
  3. Prioritize your expenses: While figuring out your EMI, you should not only count-in your current expenditure but also the expenditure that will incur in the future. Your current and potential future expenditures such as family expenses, medical expenses, kids’ expenses, lifestyle expenses, personal expenses etc. should be factored-in while you decide on your EMI.
  4. Consider the age: Age influences the EMIs rate of interest significantly. In your 20s, you can always afford to pay heavy EMIs initially, as the responsibilities are less. As your age increases, so will your salary and EMIs feel less burdensome. However, this may not work if you start a loan in your 30s, as you have to balance the EMI well with your other spending too. So, play safe when deciding on your home loan EMI to keep paying on-time.
  5. The income state: If your current job is stable you can safely keep your EMI on the higher side. Banks usually keep 40% – 45% of your monthly earnings as your EMI. However, if it seems that you are going to remain financially stable for a long period then you can go ahead and service heavy EMIs early-on in your loan tenure. Also, make sure that your EMIs don’t affect your investments and expenditures.
  6. Market state: It is an obvious fact that the rate of interest of your EMI shall not remain the same all throughout. While fixed-rate EMIs have a significantly high rate of interest, the interest rates of marginal cost lending rate EMIs changes when the bank chooses to change it. Thus, depending upon the type of EMI you chose, your rate of interest will differ.
  7. Overall Considerations: You should consider your present income, lifestyle, increase/decrease in income, ability to switch jobs, your increments, your career choices in upcoming years, your goals, future expenditures, and retirement plans before planning your EMIs.

 

Any fault in EMI may lead to bitter consequences. Hence, it is better to plan your EMIs in a way that they do not pose any financial crisis to your household. Hope these few points will help you figure out your EMI in a better way.

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