Better to invest in EMI than rent

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Traditional lenders had made lending money at high interest rate in a short time a schadenfreude business. With those bitter experiences from the past, individuals preferred to skip the essentials than counter a lender. But today’s scenario is totally different, you can dare to purchase a beautiful home by taking a loan. Home loan is the kind of loan provided by the financial organizations to the borrower for purchasing an already/under construction flat/ home, a plot of land or renovating/re-constructing an old structure. The lending institutes provide the loan amount at competitive rate of interest for a stipulated time.

The borrower can be an Indian resident or NRI; he/she can be a salaried or self employed person. There are several organizations in the market that have come up with the loan help and tailor the whole process according to the borrower’s convenience. It is wise to select the best and reliable one who suits the borrowers’ purpose. It’s not necessary that the one providing the home loan at lowest interest rate will be user-friendly or will providethe best services. With the advent of online banking facility, most of the lenders are reaching you in single clicks. You get the best options served at your convenience with your diligent selection.

Before selecting the financial partner the borrower should keep the following factors in mind:

·        The organization must provide the maximum required amount, which could be 60-90% of the property value, rest amount the borrower has to pay as down-payment.

·        The rate of interest should be in harmony with the market rates.

·        Loan tenure should be sufficient for the borrower to pay back the amount.

·        Flexibility in repayment options.

·        Options of prepayment without penalty should be catered to the borrower.

·        Processing charges should not pinch the pocket.

Aforesaid factors can guide the potential borrowers to choose the partner for home loan, but it is wise to lock the deal after good amount of research and field work. Be thoroughbefore investing as it is not a one day affair, rather it’s more like a companion for life. A single careless step can topple this beautiful venture.

After taking the loan, it’s better to repay the amount at the earliest to avoid dragging the tenure and paying a huge sum as interest. The initial part of the tenure basically consists of the interest payment, after that borrower pays the principal amount. Pay the majority portion of the principal amount to lower the EMI and cut-short the tenure. Maintain a good credit score to grab the best competitive rates.

The EMI is determined after taking into consideration the principal amount, interest on the outstanding amount and number of installments. More the loan tenure, lesser will be the EMI, more the principal amount more will be the EMI. In order to lessen the EMI burden it’s not wise to prolong the tenure, unless you have no other option. Else you end up paying huge chunk as interest. So plan the loan process diligently.

Take the help of online services to arm yourself with beforehand knowledge of types of interest rates: fixed, floating/adjustable or truly fixed rate. Prepare your budget for down payment and the monthly budget for paying the EMI with home loan EMI calculator. Take the help of the opportunity and head towards accomplishing your dream venture of buying a home. It’s better to pay the EMI and own a house than paying a rent and wasting the money.