There are a variety of loans available nowadays for borrowers. Two loans that often confuse people are home loans and mortgage loans. Home loan funds are provided to help the person borrow, construct, or purchase a residential home. Mortgage funding is provided against keeping property collateral, also known as a loan against the property.
Tips for reducing the burden of a mortgage loan on the borrowers
1. Increase the amount of EMI
Increasing the amount of EMI can help you with clearing off any kind of loan. You can increase the amount of EMI by 10-15 percent which will automatically help to cover up your loan tenure which will result in lowering your cost of the loan.
2. Prepay the loan amount
When you pay your mortgage amount before the due date you can get off the burden of the interest on the loans. For example, if your loan amount is of Rs.20 lakh and has a loan tenure of 10 years with an interest rate of 10 percent. The EMI would be roughly around Rs.26400. If the person pays an additional amount to their EMI they will be able to repay the loan amount quickly. In a longer duration, it can help you save a large amount of money by paying your loan amount faster.
3. Maximize your windfall gain
Any unexpected and sudden gain in income is referred to as windfall gains. These gains can be gained from inherited properties, bonuses, or unexpected additions to your income. But using these gains for the repayment of your debt will be a very smart move and will also result in reducing your liability.
4. Refinance your mortgage
Refinancing the mortgage means swapping out the older one. The new mortgage is provided at low interest rates which results in low monthly payments and builds your strong credit score. Always remember to conduct closing cost fees and various other expenses.
5. Using your existing investment
All of your investment dividends can be used to pay your debt which is in need of financial help. You can also borrow some funds against your insurance schemes or PPF. The existing investments should only be used when you think that your future is uncertain.
